Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

HUMBERSIDE BILL [Lords]

Order for consideration, as amended, read.

To be considered upon Thursday.

COUNTY OF AVON BILL [Lords]

DERBYSHIRE BILL [Lords]

Read a Second time and committed.

Oral Answers to Questions — SOCIAL SERVICES

Long-term Unemployed Persons

Mr. Robert Hughes: asked the Secretary of State for Social Services what proposals he has to improve the position of the long-term unemployed in relation to their entitlement to benefit.

The Minister for Social Security (Mr. Hugh Rossi): With effect from yesterday, unemployed men of 60 or over who have been receiving supplementary benefit for a year or more and decide not to register for work have become eligible for the higher long-term rate of benefit. Of course, we have every sympathy with the problems faced by those who have been unemployed for a long time, but, as the cost of extending entitlement to all long-term unemployed people would be well in excess of £100 million, this cannot be done in the present economic circumstances.

Mr. Hughes: Does the Minister realise that that answer is humbug? Does he accept that the under-60s must be facing problems as great as those of the over-60s, and that for a married man under 60 to lose as much as £10 a week is discrimination against the unemployed? Will he for once put his sympathy in the right place, do things properly, and extend the rate for people under 60?

Mr. Rossi: It ill becomes Labour Members to speak of humbug. During the whole of the Labour Administration they spoke of a high priority for extending long-term benefits, but did nothing. We at least have extended it to one class of people and reduced the waiting period from two years to one year. We have done something. They did nothing.

Mr. Paul Dean: I welcome my hon. Friend's original answer, but will he give special consideration to the long-term unemployed who have children, and particularly bear in mind the fact that they are not eligible for the long-term rate of supplementary benefit, however long their period of unemployment?

Mr. Rossi: I note what my hon. Friend said. We shall, of course, consider the matter carefully.

Mr. Mike Thomas: On unemployment benefit as a whole, will the Minister give a pledge that the Government do not intend—it would be the first time in 50 years that any Government did this—to reduce the real value of unemployment benefit?

Mr. Rossi: I cannot speak of these matters today. Public expenditure is under review, and a statement will be made in due course.

Mr. Buchan: The Minister should be a little more honest when he answers questions. The Government have already cut these benefits, and I wish that he would admit that. Does the Minister realise that we are in a new situation? There has been a 70 per cent. increase in the long-term unemployed as a result of the Government's actions during the past 12 months. He is condemning men in their early forties and fifties to a permanent short-term supplementary benefit rate. The cost of putting them on a long-term rate is as nothing compared with the slow consequences of the Government's actions.

Mr. Rossi: I accept that last year there was a 5 per cent. abatement on unemployment benefit, but that was a preliminary to bringing unemployment benefit into taxation, which will take place later this Session.

Community Health Councils

Mr. Joseph Dean: asked the Secretary of State for Social Services whether he will ensure that community health councils in England and Wales are provided with an opportunity for adequate consultation with his Department and with regional and district health authorities, in those cases where policies or other factors affecting the availability of a comprehensive health service in their districts are at issue.

Mr. Cunliffe: asked the Secretary of State for Social Services if he will make a statement on the role he believes community health councils should play in relation to queries or complaints about the National Health Service; and whether he has any plans to enlarge this role in the future.

The Minister for Health (Dr. Gerard Vaughan): The community health councils represent the public interest in the National Health Service locally, and not regionally or nationally. Therefore, community health councils will be linked with the new, more local district health authorities in future. We have no plans to alter their role on complaints.

Mr. Dean: I thank the Minister for his reply. When he reconstitutes the community health councils, I hope that he will hold the fullest consultations. Has the Minister yet called for any nominations? Will he give an undertaking that a substantial percentage of the places on the community health councils will he made available to local authority representatives?

Dr. Vaughan: We have had extensive consultations, and a circular will be issued to community health councils soon which will set out more clearly their role and membership. I shall place a copy of the circular in the Vote Office so that hon. Members may see it.

Mr. Michael McNair-Wilson: As community health councils represent consumers in the National Health Service, is my hon. Friend satisfied that the Department is giving them sufficient publicity to enable those using the NHS to recognise them for what they are?

Dr. Vaughan: I understand my hon. Friend's question. Community health councils have a valuable role, but it is a local role. It is for the local health authority and the local community health council to make their presence known.

Mrs. Dunwoody: If that is so, why has the Minister suggested that he will send out a circular defining the role of community health councils? Community health councils help people who have problems with the NHS and represent them when they need assistance. Why does the Minister suggest that some redefinition is needed? Community health councils need more support for the role that they play.

Mr. Speaker: Order. Hon. Members have repeatedly made statements instead of asking questions.

Dr. Vaughan: When we reorganised the National Health Service and removed the area health authority layer there was some doubt about the future of the community health councils. Therefore, we consulted and thought it advisable to issue a circular on our views on the consultations and the future role of the community health councils.

Supplementary Benefit Payments

Mr. Winnick: asked the Secretary of State for Social Services whether it is intended to revise the £2,000 ceiling in regard to supplementary benefit payments.

The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): The Supplementary Benefit Policy Inspectorate is reviewing the application of the supplementary benefit capital rule, including the effect of the level of the disregard. Its report will be received shortly by Ministers.

Mr. Winnick: Is the Minister aware of the deep and understandable sense of grievance that is felt by many men in their fifties who, having been made redundant, cannot claim a penny of supplementary benefit because they have saved £2,000 or more during their working lives? In many cases redundancy money has been included in the £2,000. When will the Government drop this penal measure against ordinary people?

Mrs. Chalker: I am aware of the concern expressed by many hon. Members about not only redundancy pay, but other forms of saving. We have asked the inspectorate to take a special look at all those difficult problems. It would be wrong for me to anticipate the report that will shortly be given to Ministers.

Mr. Cormack: How long has it been Government policy to penalise thrift?

Mrs. Chalker: It is not Government policy to penalise thrift. We cannot ignore the fact that some people have

amassed considerable amounts of capital. People save for a rainy day and when that day arrives the Government have a right to take some of that capital into account. The £2,000 allowance has been considered to be fair in the majority of applications. People fall outside that limit, and I can go no further than to say that we are well aware of that.

Mr. Andrew F. Bennett: Does the Minister accept that not only the principle is wrong, but the scale was set 12 months ago? As inflation stands at about 12 per cent., surely the Government should increase the uprating by £200 or £300.

Mrs. Chalker: I am aware of the concern felt by the hon. Gentleman and other hon. Members. However, this matter should remain part of the review. It would be wrong to ask for a special inspectorate report to be undertaken on the whole issue and then to prejudge its answers.

Mr. McCrindle: I accept that there probably is a case for maintaining a level of capital above which benefits are affected, but does my hon. Friend accept that, in all conscience, £2,000 is not much in 1981? Will she give an assurance that that figure will be kept constantly under review and that, as soon as it is possible to take account of the changing value of money, some increase in the figure will be forthcoming?

Mrs. Chalker: My hon. Friend and some hon. Members seem to have forgotten that we raised the limit from £1,250 to £2,000. As a result, 44,000 people gained from being allowed to retain more of their savings. We are aware of the problems, but as there was a large increase in November last year, I think that we are right to await the result of the inspectorate's review.

Mr. Rooker: Will the Minister confirm that the £1,250 was not a cut-off limit, equal to the present £2,000 limit, and that it was part of a sliding scale? Will she also confirm that her answer was grossly misleading to the House as well as to those outside? As the House wrote the regulations, why could not the House and the Government take a decision on redundancy payments, savings and life insurance policies? Why should it be left to civil servants in the inspectorate to take such decisions?

Mrs. Chalker: I should state at the outset that I had no intention of misleading the House. Of course the £1,250 was part of a sliding scale, but that does not alter the fact that 44,000 people gained as a result of last November's change. Although 9,000 people initially lost entitlement, some have regained it. The hon. Gentleman mentioned the issues that have been referred to the Supplementary Benefit Policy Inspectorate. The inspectorate will make recommendations and, when those are received, Ministers will consider them and take the decisions.

Craft Apprenticeships

Mr. Marks: asked the Secretary of State for Social Services what was the number of craft apprenticeships in the National Health Service started each year since 1978.

The Under-Secretary of State for Health and Social Security (Mr. Geoffrey Finsberg): Information in the form requested is not collected centrally and could not be obtained without undue cost; but the available statistics show that 401 building and engineering craft apprentices were employed in the National Health Service in England at 30 September 1978 and 460 at 30 September 1979.

Mr. Marks: Is it not astonishing that the Department cannot find out from health authorities how many craft apprentices began this year? Will the same thing happen in the NHS as happened when the Under-Secretary of State was in charge of the Property Services Agency? Will there be a 70 per cent. cut in apprenticeships?

Mr. Finsberg: The hon. Gentleman has forgotten that the running down of the PSA was part of a policy that was begun under the Labour Government.

Anti-smoking Campaign

Mrs. Faith: asked the Secretary of State for Social Services if, in view of the finding contained in the report of the Health Education Council that 5 per cent. of patients stopped smoking when advised by their own doctor to do so, he will place greater emphasis on the role of the family doctor in his anti-smoking campaign.

The Secretary of State for Social Services (Mr. Norman Fowler): General practitioners are well placed to advise their patients on the dangers of smoking and have an important part to play in helping people to stop. The Health Education Council and Action on Smoking and Health recently sent every general practitioner a special kit designed to help them to advise their patients on giving up smoking, and I very much welcome that action.

Mrs. Faith: I thank my right hon. Friend for that reply. Given that the death rate from lung cancer and heart disease is higher in Britain than in other countries, will he give every encouragement to doctors to distribute these information kits to their patients? We must recognise the report's finding that if each doctor persuaded 25 people a year to give up this pernicious habit, 500,000 people would stop smoking in one year.

Mr. Fowler: I agree with my hon. Friend. Smoking is a danger to health, and my aim is to reduce the toll of disease and death that is brought about by smoking.

Mr. Ashley: Do the Government intend to give in to various pressures and to back-track on their commitment to impose statutory controls on advertising if voluntary efforts fail? Is it not time that we banned the advertising of cigarettes, inch, ding televised sponsorship of smoking, because of the ill-health and cost involved?

Mr. Fowler: There has been absolutely no change in the Government's policy on smoking. Successive Governments have preferred voluntary agreements. We are currently looking at those agreements, but no decision has yet been taken.

Mr. Beaumont-Dark: Will my right hon. Friend reject some of the advice that has been given him today? Does he agree that if we point out the dangers of smoking it is no part of the Government's job to continue to be "grannies" on every issue? For once, let us leave the issue alone. There are enough warnings already for intelligent people to take note of.

Mr. Fowler: There is a responsibility on Ministers to give advice on the dangers of smoking. There can be no question about the dangers to health of smoking, and I shall continue to give that advice.

Mr. Terry Davis: Does the Secretary of State agree with his predecessor that the current agreement with the tobacco industry is unsatisfactory?

Mr. Fowler: As I said, we are currently looking at the voluntary agreements—not only the agreement with the tobacco industry generally, but the agreement on sports sponsorship. No decisions have yet been taken.

Nuclear Attack (Medical Emergencies)

Mrs. Renée Short: asked the Secretary of State for Social Services what representations he has received from the medical profession about medical emergencies arising from a nuclear attack; and what plans he has to protect the population.

Mr. Geoffrey Finsberg: None, Sir. However, I am aware that the British Medical Association has set up an inquiry into the medical effects of nuclear war. The National Health Service has been given guidance on how health care services should be organised in the event of such a war.

Mrs. Short: Does the Minister consider that the medical profession should give information to the public about how restricted it would be in preventing terrible suffering and a massive number of deaths in the event of a nuclear attack? Does he believe that he should encourage it to do that? Does he agree that the best way of preventing the appalling calamities that could happen to this population would be to do away with all nuclear weapons and make sure that they were never used?

Mr. Finsberg: Whatever else my responsibilities are, they are not in foreign affairs and defence. The British Medical Association is a free organisation, quite able, if it wishes, to put forward its own views.

Mr. Stokes: Is my hon. Friend aware that the local authorities already have a responsibility for civil defence, which all hon. Members should support, and not try to cause alarm and despondency?

Mr. Finsberg: If my hon. Friend was saying that the question was causing alarm and despondency, I agree with him.

Mr. Cryer: Is it not a scandal that the Secretary of State is prepared to spend £500,000 on creating ludicrous defence organisational posts in the area health authorities? Is not the reality that in 1978–79—apparently the last year for which figures are available—there was a shortage of 900 doctors and consultants in the National Health Service? Should not money be spent on providing those posts rather than ludicrous defence organisational posts, because the Minister knows full well that there is no defence against nuclear warfare?

Mr. Finsberg: That is the subject of a later question.

Nurses

Mr. Ennals: asked the Secretary of State for Social Services how many nurses are now registered as unemployed; how this figure compares by numbers with three, six, nine and 12 months ago; and what percentage increase these figures represent over the same periods of time.

Mr. Fowler: The Department of Employment provides quarterly returns on the number of nurses and midwives registered as unemployed. On the basis of those returns the information requested is as follows: at 30 September 1981, 5,311 qualified nurses and midwives were registered as


unemployed in England; at 30 June 1981, 4,644; at 31 March 1981, 4,499; at 31 December 1980, 4,351; at 30 September 1980, 3,932. These figures represent corresponding percentage increases of 14·4, 3·2, 3·4 and 10·7.
I am glad to tell the House that, since the Government took office, the number of qualified nurses and midwives employed in the National Health Service has increased by about 11 per cent.

Mr. Ennals: Is the Secretary of State aware that the Department of Employment's figures show that there are now more than 14,000 nurses unemployed—43 per cent. above the position 12 months ago, and three times as many as when the Government came to power? In the light of the pressure that is now being put on the National Health Service, is not that disgraceful?

Mr. Fowler: The best thing that I can do is to compare the figures for the period when the right hon. Gentleman was Secretary of State with the position now. In March 1979 the number of qualified nursing and midwifery staff employed was 192,000. The number now is 213,000—an increase of about 21,000 in this Government's period of office.

Mr. Jessel: Is my right hon. Friend aware that thousands of trained nurses cannot be employed because they have injured their backs lifting patients? Is he further aware that 750,000 working days are lost each year because of that? If I write to him, will he see what can be done to step up preventive measures?

Mr. Fowler: I shall do that even if my hon. Friend does not write to me. We are aware of the problem and have commissioned a research project at Surrey university, which we are financing.

Mr. Pavitt: Is the Secretary of State aware that the cuts over the last two years mean that area health authorities have put cash limits on the employment of nurses and that that is having a diabolical effect on specialties? Nurses are working overtime at weekends merely because there is not sufficient cash to employ those who are available and could be employed.

Mr. Fowler: I do not think that the hon. Gentleman could have been listening to what I said. There are now more, not fewer, nurses employed. I am not sure what the hon. Gentleman was talking about when he mentioned the cuts. Over the last two and a half years we have protected and increased spending on the National Health Service in real terms by 5 per cent.

Mrs. Dunwoody: Why does the Secretary of State persist in saying that, when he knows that by applying rigid cash limits he has made certain that, with rising inflation, which is not included in his calculations, there will be a cut in resources?

Mr. Fowler: As usual, the hon. Gentleman is talking nonsense. [HON. MEMBERS: "Withdraw."] Withdraw that? Not on your life!

Hon. Members: Withdraw.

Mr. Speaker: Order. Hon. Members must give the Minister a chance. Then we shall see how we get on.

Mr. Fowler: I called the hon. Lady an hon. Gentleman. I undoubtedly and unreservedly withdraw that. But the hon. Lady is still talking nonsense. Why does

she not recognise—surely it is a matter of agreement between both sides of the House—that the Government should be congratulated on the fact that there are now more, not fewer, nurses working in the NHS?

Mr. Hal Miller: asked the Secretary of State for Social Services if he is satisfied that the nurses rules provide a sufficiently impartial and equitable base for the hearing of disciplinary complaints against nurses.

Dr. Vaughan: Yes, Sir. The rules provide for a full, impartial hearing of disciplinary complaints against nurses under the rules of evidence.

Mr. Miller: Does my hon. Friend accept that my constituent, Mrs. Wilshire, has a keen sense of injustice following her hearing before the committee on a number of charges that were the responsibility of others who have not been similarly proceeded against? Is he aware that she was physically incapable of committing one of the charges? Is he further aware that the proceedings were conducted in the nature of a prosecution by the medical profession? Should there not be an independent element?

Dr. Vaughan: If my hon. Friend feels that there was a miscarriage of justice in that case, I should be pleased if he would contact me again. We are most concerned that these hearings should be not only just, but seen to be just by the persons involved.

Mr. Christopher Price: Has the Minister read the recent report from Social Audit about what happens to various nurses in psychiatric hospitals who make complaints about the conditions in those hospitals? They are frequently victimised for bringing to light scandals that should properly be brought to light. Does he remember the recent case at Broadmoor, where two nurses were victimised for bringing to light the fact that electro-convulsive therapy was being used in an unmodified way that was frowned upon by the Royal College of Psychiatrists, and still remain victimised by his Department as well as by others?

Dr. Vaughan: I cannot accept that there has been general victimisation in any way, as the hon. Gentleman implied. If there are individual cases where he feels that complaints have not been properly looked into, my right hon. Friend and I will be glad to hear about them. There is a well laid down procedure, which should be followed. If the hon. Gentleman believes that it is not followed, I should be glad if he would let me know.

Death Grant

Mr. Andrew Bowden: asked the Secretary of State for Social Services if he is now in a position to make a statement on the future of the death grant.

Mr. Dempsey: asked the Secretary of State for Social Services if he will make a statement following his consultation on the level of the death grant.

Mr. Rossi: Our considerations are not quite complete, but we expect to make a statement before the end of the year.

Mr. Bowden: Is my hon. Friend aware that we have been waiting a long time for such a statement? Does he recognise that the Dignity in Death Alliance, which is supported by 40 national organisations, is deeply concerned about the derisory level of the death grant,


which has not been increased for nearly 14 years? Will he please ensure that there is a statement before Christmas and that there is no question of any means test at the time of bereavement?

Mr. Rossi: I agree that we have been waiting a long time for something to be done about the death grant. We have been waiting for 14 years. I promise that there will be a statement before Christmas. I assure my hon. Friend that we are most reluctant to impose a means test upon anyone at a time of bereavement.

Mr. Dempsey: Does the Minister realise that when the death grant was increased in 1967 it represented 76 per cent. of the cost of a modest funeral, whereas today it represents only 9 per cent? In view of the high cost of dying—incidentally, elderly persons are prevented from insuring against it—will the hon. Gentleman give an undertaking that we shall receive more than a statement and that there will be intimation of an urgent and substantial increase when he comes to the Dispatch Box to make a statement?

Mr. Rossi: If we were to increase the death grant to represent its 1967 value, the grant would stand at £145 and the total cost of paying that to everybody, irrespective of whether they needed it, would be £98 million.

Sir Albert Costain: Does my hon. Friend realise that if the grant is paid to those who do not need it it will be recovered by estate duty and the Government will not lose?

Mr. Rossi: These are matters that we have to take into account in considering this complex issue. I ask my hon. Friends to be patient. We shall produce a statement before Christmas.

Mr. Rooker: I understand the difficulty and complexity of this issue, and I do not wish to make a party point, but, bearing in mind what the hon. Gentleman has said about the Government's great reluctance to impose a means test, will he be prepared to go one step further and give a commitment that there will be no means test involved in payment of the death grant?

Mr. Rossi: We are considering ways of being able to make an increase in the benefit by passporting means. These methods are still under consideration and no final conclusion has been reached. I cannot make any commitment in advance of a statement.

British Steel Corporation (Retirement Provisions)

Mr. Barry Jones: asked the Secretary of State for Social Services if he will take action on the Equal Opportunities Commission formal investigation report on the British Steel Corporation concerning the effects of the statutory pension ages for men and women on the various redundancy provisions applied at the Shotton works of the corporation; and if he will make a statement.

Mrs. Chalker: Extra-statutory redundancy provisions at Shotton are a matter for the British Steel Corporation to determine through the normal process of collective bargaining. Equalisation of State pension age, which is a principal recommendation of the Equal Opportunities Commission report, is already a long-term objective of the Government. However, as the recent White Paper "Growing Older" makes clear, cost and other considerations preclude any early change.

Mr. Jones: Is the Minister aware of the tremendous campaign that has been waged by Mr. J. G. Jones and other redundant workers from Shotton? Does she agree that the men of Shotton who were made redundant have achieved a moral victory? Can the Minister speed up the implementation of the objective that she has stated?

Mrs. Chalker: I am aware of the campaign that the hon. Gentleman has cited. I understand the impatience about moving towards a common pension age. The hon. Gentleman will be aware that the all-party Select Committee on Social Services is undertaking a study of earlier retirement, or the equalisation of retirement ages, and flexible retirement ages. We must await its report and the conclusion of the many other discussions that are taking place. A common pension age will perhaps have a greater effect on the occupational pensions industry than on the State pension sector.

Benefits (Inflation)

Mr. Newens: asked the Secretary of State for Social Services what steps he proposes to take to make good any shortfall in the value of the increases in pensions and other benefits payable from 23 November due to any underestimate made in the likely rate of inflation.

Mr. Foulkes: asked the Secretary of State for Social Services whether he is satisfied that the increase in pensions and other benefits payable from 23 November is sufficient to compensate for the increase in prices since the last uprating in 1980.

Mr. Carmichael: asked the Secretary of State for Social Services whether he will ensure that the increase in pensions and other benefits payable from 23 November is sufficient to compensate for the increase in prices since the last upating in 1980.

Mr. Fowler: The extent of any shortfall this year will not be known until next month. But, as I made clear on 6 November, the Government have given a commitment that we will fully compensate pensioners for price increases over the lifetime of this Parliament. Therefore, any shortfall in this month's uprating of retirement pensions will be made good at the next uprating.

Mr. Newens: Last year the Government hurried to introduce legislation that had the effect of preventing pensioners from receiving increases in excess of the cost of living increase. Against that background, would it not be shameful, if pensioners were left for the whole of the year until their next increase without any steps being taken to provide for a supplementary increase? That would be especially shameful, as they will be 3 per cent. worse off this year as matters stand.

Mr. Fowler: I understand the hon. Gentleman's argument. However, successive Governments have considered that annual upratings provide the only practical way of dealing with 8 million or 9 million pensioners. I cannot promise any change in that procedure.

Mr. Foulkes: Will the right hon. Gentleman confirm that yesterday's increase cheated pensioners out of 3 per cent. of the increase that was due to them? Does he agree that next November will be far too late for the many pensioners who will have died by then? Will he make a prompt announcement about an early increase to make good the shortfall?

Mr. Fowler: I entirely reject the hon. Gentleman's approach. We have made it clear throughout—I shall continue to repeat the Government's pledge—that we shall retain the value of the pensioners' pensions. That continues to be our policy. Pensioners have been protected against price increases, and since November 1978 pensions have risen by nearly 52 per cent.

Mr. Buchan: Does the right hon. Gentleman accept that the other key link is the relationship to earnings? Last year the Government introduced a Bill to claw back from pensioners a miserable 1p in the pound. Why cannot they restore the position? Each married pensioner is losing £1·20 from his uprating because of the Government's action. The Government could introduce an interim measure. They could attach the increase to the Christmas bonus, for example, to ensure that pensioners get back the 3 per cent. for the rest of the year. Methods are available to the Government and one was found, for example, in 1975. Is that not right?

Mr. Fowler: The hon. Gentleman must know that items such as the Christmas bonus were settled months ago. The extent of the shortfall will not be known until next month. We shall have to continue with the annual uprating, which I think is the fairest and most reasonable way of proceeding.

Mr. Buchan: This is the most serious shortfall that we have had, against the background of a specific cut that was made last year. That was done despite the Prime Minister's commitment that she would act in the lifetime of this Parliament. However, old people will still be deprived of their rights for the remaining 12 months. If the Government need a fresh Bill——

Mr. Speaker: Order. It is not fair to argue a case now. It is Question Time.

Mr. Fowler: I repeat that the Government will continue to protect pensioners. I cannot and will not give the sort of commitment that the hon. Gentleman wants. If he were in my position, I do not believe that he would be able to do so either.

One-parent Benefit

Mr. Knox: asked the Secretary of State for Social Services what percentage of those entitled to receive one-parent benefit are receiving it.

Mrs. Chalker: Our latest estimate is that one-parent benefit is being paid to about 66 per cent. of the lone parents who stand to gain by claiming the benefit.

Mr. Knox: While this represents an improvement compared with the position 12 months ago, does my hon. Friend agree that it is still rather a disappointing percentage? Does she propose to take any further steps to initiate an improvement?

Mrs. Chalker: There has been an improvement of 6 per cent. since a year ago, but the action that we are taking is as follows. We have already changed the name from "child benefit increase" to "one-parent benefit", which is more expressive and encourages more single-parent families to make applications. This month a note advertising one-parent benefit to all new child benefit recipients will be sent with their books. From January, over a period of 10 weeks, a letter will be sent to 300,000

people who are single payees on the child benefit order book. There will be a television filler film for both BBC and ITV and cassettes for local and national radio stations. In March 1982 we shall update the note advertising one-parent benefit with a special note in the child benefit order books advertising pictorially one-parent benefit on one side and family income supplement on the other side.

Mr. Carter-Jones: Does the Minister agree that one-parent families are probably the poorest families in the country? Is she satisfied about the attitude of inspectors in the Department regarding the harassment of such one-parent families? Will she undertake to investigate such harassment and report back to the House?

Mrs. Chalker: As the hon. Gentleman knows, there are already a large number of disadvantaged two-parent families as well as single-parent families. With regard to his second point, there is no excuse and no reason for any claimants to be harassed. The instructions on the investigators' guide are clear. We are following up any cases of potential harassment reported to us.

Mr. Robert Hughes: As the Minister shows such great sympathy for one-parent and two-parent families facing difficulties, may I ask whether she saw the programme on television last night in which it was alleged that people being investigated by the special squads were taken into a room and locked inside until they could provide answers? Will she make a statement and arrange for a full investigation, and make sure that if someone is to be investigated he is allowed to take a friend with him or at least is not locked in while the investigation is taking place?

Mrs. Chalker: I saw the programme to which the hon. Gentleman refers. With all my experience, I found it to be an unbalanced programme, for a number of reasons. One is that it is often for the privacy and security of the person concerned that he is in a room with the door locked. On frequent occasions, in the public waiting areas of our local offices, people burst in through doors, which destroys privacy——

Mr. Hughes: These doors were locked on the outside.

Mrs. Chalker: I assure the hon. Gentleman that I am looking closely at all the allegations that were made in the film, but they were vastly exaggerated and unbalanced in their presentation. I shall certainly look into the matter a good deal further.

Proposed Legislation (Departmental Responsibility)

Mr. Canavan: asked the Secretary of State for Social Services for what measures in the Gracious Speech he will have departmental responsibility; and if he will make a statement.

Mr. Fowler: The Gracious Speech said that there would be a Bill to introduce a statutory sick pay scheme and a housing benefit scheme, and another to make reforms in the law on mental health in England and Wales. My Department has responsibility for those Bills, both of which are now before Parliament.

Mr. Canavan: Will the Secretary of State give us an assurance that the reference in the Queen's Speech to further reductions in wage settlements does not mean that his Department will try to force a 4 per cent. wage


settlement on the nurses? Does he realise that it would be sheer exploitation of one of the most dedicated professions to try to force on it such a settlement, which would be a wage reduction in real terms because of the high rate of inflation created by the failed policies of this discredited Tory Government?

Mr. Fowler: I share the admiration of the House for the nursing profession. Under this Government the wages and salaries of nurses have increased substantially. I expect to see representatives of the nursing profession shortly to talk about those matters.

Mr. Mike Thomas: Will the right hon. Gentleman give an undertaking, with regard to his Department's responsibility for implementing the economic aspects of the Queen's Speech, that he is not considering a real cut in the value of supplementary benefit payments, on which the 2 million poorest families in this country depend?

Mr. Fowler: The decisions will be announced in due course. I ask the hon. Gentleman to wait for them.

Mr. McCrindle: As there are growing signs that the problem of those who leave employment to go to another private firm and who lose their occupational pension rights is becoming acute, does my right hon. Friend see any reason to add to the commendable list of Bills for which he is responsible, a Bill dealing with this matter?

Mr. Fowler: As my right hon. Friend the Leader of the House is here, I can tell my hon. Friend that I cannot promise to introduce legislation this year on that subject, but I am aware of the problem, as are the Government. I shall certainly consider it.

Age Concern (Report)

Mr. Race: asked the Secretary of State for Social Services whether he has received a copy of the report from Age Concern "Services for Old Age: A Growing Crisis in London"; and whether he will make a statement on the response which Her Majesty's Government will make to the report.

Mr. Geoffrey Finsberg: The Department received a copy earlier this month. I see it as a useful contribution to the continuing debate about how limited resources can best be allocated.

Mr. Race: Is the Minister aware that his Government's policy of reducing the numbers of acute beds in London's health service, coupled with the actions of the Secretary of State for the Environment in cutting the rate support grant, is placing services for old people in London under serious attack? Will he make strong representations—after reading that report carefully—to the Secretary of State for the Environment, calling for no further cuts in the rate support grant in London with regard to old people?

Mr. Finsberg: The hon. Gentleman will know that one of the things that we are trying to do is to get patients, including geriatrics, out of hospitals when possible and into the community. In personal social services, as my right hon. Friend has said, there have not been the cuts to which the hon. Gentleman refers.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Ioan Evans: asked the Prime Minister if she will list her official engagements for 24 November.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others, including the President of the European Commission. In addition to my duties in the House I shall be having further meetings later today, including one with the Speaker of the Indonesian Parliament. This evening I shall attend the annual diplomatic reception given by Her Majesty the Queen.

Mr. Evans: Does the Prime Minister remember the poster that was used in the last election, produced by Saatchi and Saatchi, portraying an imaginary unemployment queue and with the words "Labour Is Not Working"? Does she believe that Conservatism is working, as unemployment is still hovering on the 3 million mark? If YOPs and other schemes are not taken into account, it is nearer 4 million. What message will she send to the young unemployed coming on the "Jobs Express" from Scotland, England and Wales, when they arrive in London? What hope does she have for the electors of Crosby?

The Prime Minister: Unemployment is rising in Germany, France, Belgium and all the other OECD countries, with the exception of Japan and Denmark, because of the world recession. That is still causing great trouble with the unemployment figures in all countries. As the hon. Gentleman will have seen from the figures today, there is a reduction in the numbers registered as unemployed, and in particular there is a reduction in the number of school leavers. It is small, but welcome.

Sir John Biggs-Davison: Will my right hon. Friend today seek to expedite the meeting between the Attorney-General and the Irish Attorney-General so that when she meets Dr. Garret FitzGerald at the EEC she can put to him firm proposals either for extradition or for some efficacious alternative?

The Prime Minister: What my hon. Friend asks is not possible, but in any event I am not likely to discuss those matters with Dr. Garret FitzGerald at the meeting of the European Council.

Mr. Foot: The right hon. Lady has talked of an improvement in the unemployment figures, but does she not acknowledge that it is only in comparison with the terrible and unprecendented figures achieved by her Administration? Is it not a fact that the underlying trend is, tragically, still going up? Have not the figures increased by a total of 200,000 since she was saying that we had passed the bottom of the trough of the recession a few days ago?

The Prime Minister: With regard to the trough of the recession, as the right hon. Gentleman will be aware it always takes longer for the unemployment figures to fall after an increase in production than for any of the other indicators to start to go the right way. That is a well-known but tragic fact, because there is still spare capacity in a number of industries. Therefore, there could be an increase in production before a substantial reduction in unemployment. Nevertheless, the small reduction today of about 35,000 is welcome. There is still an underlying


increase, but it is less than it has been. Of course, we still have to face the January figures, which, historically, tend to show an increase.

Mr. Foot: As the right hon. Lady claims that she studies the figures so carefully and that improvements are taking place, will she tell us when we may expect a reversal in the figures? There has been an increase of 200,000 since the middle of this year. The increase still continues and the underlying trend is still getting worse. When will the figures turn the other way?

The Prime Minister: I always take the advice given by the right hon. Gentleman himself in answering questions on unemployment from the Dispatch Box. He did not give precise forecasts. I point out again that unemployment is rising in Germany and in France, although they have the draft whereas we do not. Unemployment is rising throughout the OECD, with the exception of Japan and Denmark. Tragically, I believe that it will indeed take a very long time before we can begin to get back to the much lower figures to which we have been accustomed.

Mr. Maxwell-Hyslop: As the Brazilian Foreign Minister is about to visit Britain, will my right hon. Friend today make effective plans to build upon the more than £600 million worth of orders that this country has already received from Brazil this year?

The Prime Minister: My hon. Friend is correct. We have indeed received very good export orders from Brazil. I shall not be going there myself, but I am delighted that those orders have been obtained.

Mr. Wellbeloved: When the Prime Minister attends the diplomatic reception this evening, will she seek out the ambassador from the Philippines and express the abhorrence of the British people at the barbaric cruelty practised in connection with the preparation of dogs for slaughter for human consumption?

The Prime Minister: I cannot say whom I shall see this evening. I, too, saw the horrible photograph in one of the Sunday papers and I felt the same repugnance as the hon. Gentleman and, I am sure, all hon. Members feel. I understand that the matter has been brought to the attention of the Philippine authorities.

Mr. Alan Clark: asked the Prime Minister if she will list her official engagements for Tuesday 24 November.

The Prime Minister: I refer my hon. Friend to the reply that I have just given.

Mr. Clark: Has my right hon. Friend had time today to read a report in the Morning Star—not a paper usually noted for its support of the Government—to the effect that redundancy payments are being used to set up new businesses on an unprecedented scale? Will she comment on the report that more than 100,000 such businesses are being set up in Britain this year?

The Prime Minister: I am not a regular reader of the Morning Star. I have, however, read the Daily Star, which had a double-page presentation—entitled, I think, "Adventure"—giving details of people who have used their redundancy payments very successfully to set up businesses. They are to be congratulated on that. I believe that that, together with the figures that I have showing that

some 120,000 new businesses are being set up annually, demonstrates that the spirit of enterprise is still very much alive.

Mr. Home Robertson: In view of the widespread speculation about opinion in the Prime Minister's household concerning tobacco advertising, will the Prime Minister give her own views on that matter?

The Prime Minister: I do not smoke, and I do not answer for opinion in my household on any matter. I answer only for this Government's policies.

Mr. Marlow: During their present trials, will my right hon. Friend offer kindness to the people of Northern Ireland by saying that not only will they remain part of the United Kingdom for so long as they wish to do so, but that she wishes that they should always remain part of the United Kingdom and that her policies will be generated in such a way that they will always wish so to remain?

The Prime Minister: Northern Ireland is a part of the United Kingdom and of Her Majesty's Dominions. It is the Government's policy to maintain the Union of Great Britain and Northern Ireland in accordance with the wish of the majority of the people of the Province. That will continue to be our policy.

Mr. Robert Hughes: Will the Prime Minister today take the opportunity to condemn the South African Government for the latest of their repeated invasions of Angola? Will she make it clear to them that the action that they have undertaken is designed primarily to prevent a peaceful solution to the problem of Namibian independence and that if they do not cease their invasions she will take action in the Security Council to impose sanctions?

The Prime Minister: If one country has invaded the territory of another, we should be the first to ask it to withdraw. I make it clear that, as a member of the contact group on Namibia, we are anxious to secure independence for Namibia. For that purpose, we are taking part in the negotiations between the contact group and the front-line States at present.

Retirement Pensions and Christmas Bonus

Mr. Andrew F. Bennett: asked the Prime Minister whether, in view of current inflation rates, she is satisfied with the current level of retirement pensions and Christmas bonus.

The Prime Minister: The Government are committed to compensate the national insurance retirement pensions fully for price increases over the lifetime of this Parliament, and I have made it clear that the Government will make good any shortfall from one uprating at the next uprating. The £10 Christmas bonus is, as the name makes clear, an extra payment for pensioners and is the most that we can afford within the limits of available resources.

Mr. Bennett: Does the Prime Minister accept that the Government's estimate of the November inflation rate is wrong and that pensioners have not had a sufficient increase this year to compensate for inflation? Does she therefore agree that the Government should not wait until next November to put this right, but that it should be put right immediately, either by increasing this year's Christmas bonus or at least by introducing an Easter bonus to make good the shortfall?

The Prime Minister: The shortfall will be made good at the next uprating, which will take place next November. The hon. Gentleman will recall that there was a shortfall in the November 1978 uprating. That was made good by the Conservative Government in November 1979.

Mr. Ennals: Does the Prime Minister accept that never before have a Government consciously reduced the amount payable to pensioners below even the Government's own expectations and that now, for a whole year, the figure will be roughly 3 per cent. less than the actual rate of inflation? Does she agree that that is a deplorable situation for elderly people?

The Prime Minister: I do not accept the figure of 3 per cent. I think that 2 per cent. is more accurate. I should point out that the uprating effective from November 1978 was based upon an underestimate of 1·9 per cent.

Engagements

Mr. Chapman: asked the Prime Minister if she will list her official engagements for Tuesday 24 November.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Chapman: Will my right hon. Friend take a little more time today to consider the increasing unfairness of the rating system, notwithstanding supplementary rates? Will she recognise that there is increasing impatience on the Conservative Benches for the consultation paper on alternatives to the domestic rating system? May I tempt her to be a little more forthcoming and to agree that that consultation paper should be a short, quick step towards radically reforming the rating system by a Bill in this Parliament?

The Prime Minister: I know of my hon. Friend's very particular interest in this subject, and he knows that I share his views, as do the Government, about the unfairness of the rating system. The Green Paper to which he refers should be available next month. We shall then enter a period of consultation. The speed of that will determine whether we can bring forward a Bill, as I believe would be advisable if it is possible, during the present Parliament.

Mr. Race: Will the Prime Minister confirm or deny the stories in the national newspapers earlier this week that the Government are to cut the real value of unemployment benefit? Given that the Government have already made a 5 per cent. cut in the recent past, does she agree that a further reduction in the real purchasing power of the unemployed is totally unjustifiable?

The Prime Minister: I neither confirm nor deny any such stories as are prevalent in the newspapers at the moment. A full statement will be made in due course.

Mr. Farr: May I assure my right hon. Friend that if she wants to make an announcement that domestic rates will be abolished in the lifetime of this Parliament, it will be received throughout the country with great and overwhelming support?

The Prime Minister: I hope that my hon. Friend is correct. I would have to make clear that the revenue that comes from the rating system, both domestic rates and industrial and commercial rates, would have to be replaced by revenue from elsewhere. [Interruption.] One cannot have expenditure not covered by taxation. Only an Opposition of the irresponsibility of the present one would suggest that one could. The difficulty is deciding what taxation should be levied to cover the loss of income from the rating system.

Multi-fibre Arrangement

The Minister for Trade (Mr. Peter Rees): With permission, I should like to make a statement on negotiations for the renewal of the multi-fibre arrangement. My right hon. Friend the Lord Privy Seal reported to the House on 18 November on the Foreign Affairs Council on 16 and 17 November, including a parallel session, which he chaired, on the Community's negotiating position for the final round of talks in Geneva on the renewal of the multi-fibre arrangement.
In view of the importance of this subject for many United Kingdom interests, and, in particular, the United Kingdom textile and clothing industries, I will, Mr. Speaker, with permission, supplement what my right hon. Friend told the House and, particularly, report on subsequent events in the GATT textiles committee in Geneva.
On 17 November, the Council decided that it would be necessary to give further consideration to the question of overall import ceilings for sensitive products particularly. This embraces the all-important question of imports of low-cost textiles and clothing from the preferential countries. The House will be aware that the Government place the greatest importance on acceptance by the Community of such an overall approach.
The Council had in mind, however, that the final round of negotiations on the renewal of the MFA was to start in Geneva on 18 November. The Council wished the Commission to be able to participate in these negotiations from the beginning and to be in a position to state the broad Community position clearly, especially since other participants, notably the United States and the developing countries, had put forward formal proposals. On this basis the Commission made a full statement in Geneva on 20 November. I have placed a copy of this statement in the Library. Within the next day or two, I expect the Commission to table a full draft protocol of extension for the MFA in Geneva, essentially a formal expression of the Community's requirements in a renewed MFA.
I should like to summarise for the House the main points of the Commission's statement. The first is the depressed state of the Community's market and the very low rate of growth forecast over the next years. The House will know that this has been estimated at about 1 per cent. on average. Secondly, import penetration in clothing and textiles is much higher in the Community than in any other major importing country. Accordingly, the Community would agree only to small overall growth rates.
Third is the Community's intention to seek a surge mechanism which would guard against a threat presented by under-utilised quotas. I can tell the House that the United Kingdom was instrumental in introducing this concept into the Community position.
Fourthly, difficulties caused to the Community industry in the past as a result of reductions in demand during periods of recession when supplying countries' quotas continued to grow. The House will be glad to know that the Community has decided that special provisions should be negotiated with supplying countries to try to mitigate such problems in the future. The House will recall that this is something that the Government have been seeking for

some time, and I believe the mechanism now agreed will go some way towards meeting the industry's concerns in this area.
Fifthly, the Community's statement made clear that we shall be looking very closely at our trade with a few dominant suppliers, including Hong Kong. In particular, the Community will seek "adjustments"—I am afraid that I cannot be more specific on this point—in these suppliers' quotas, possibly with existing access being replaced in part by an element of outward processing quotas. I emphasise that what can finally be achieved in this field, is clearly a matter of negotiation.
Furthermore, and sixthly, the ability of the dominant suppliers to use the flexibility provisions to augment their quotas in particular years will also be reduced. These flexibility provisions enable supplying countries, within specific limits, to anticipate a following year's quota, carry over from a previous year's quota, or transfer quota from one product to another. We expect to negotiate substantial reductions in the ability of the dominant suppliers to use these provisions.
I have given a short summary of the Community's position on important areas of the renegotiation. In general, the Government are content with the position agreed by the Community. I would not wish to pretend, that the United Kingdom has obtained satisfaction on every single point which we have raised, but I believe that no essential British interests have been compromised.
As I have already said, certain essential elements still have to be reconciled—in particular the overall approach to low-cost imports which is a subject upon which I know hon. Members have strong views. The actual quotas for individual MFA countries will have to be hammered out in detail in the course of bilateral negotiations during next year. I believe that the groundwork has now been laid for a new arrangement which will be tough, indeed, in many respects, tougher than the current MFA, and which will provide the United Kingdom industry with the trading climate it needs to plan for the future, while taking account of all the interests represented in the House.

Mr. John Smith: I thank the Minister for making the statement; it has been requested on a number of occasions in the House. When is the statement to be placed in the Library? It was not available when I inquired a short time ago. Has not the Minister rather delicately obscured the fact that no agreement has been reached in the EEC on the single most important part of these negotiations—the agreement that there should be an overall limit, a global limit, on imports admitted to the EEC? Does not the delicate phrasing conceal the fact that no agreement has yet been reached? Can the Minister say when agreement will be reached? Will he report back to the House on the matter?
I notice that a statement has been made in Geneva which will be followed by a protocol. Will the agreement—or lack of agreement—on this subject be ready before the protocol is submitted?
On quotas, the Minister referred to an anti-surge mechanism. Does not this confirm that growth will be on the basis of existing quotas and not on existing levels of imports which, in some cases, are much lower than existing quotas? If this were not the case, there would be no need for an anti-surge provision to be introduced into the structure of the agreement.
The Minister will be aware of the very great importance that was placed on the recession clause by hon. Members on both sides of the House during the debate before the Summer Recess. The hon. and learned Gentleman says in his statement that "special provisions should be negotiated … to try to mitigate such problems in future" and goes on to call this a "mechanism". Will he say what the mechanism is? There is a suspicion that all that has been agreed is talks about talks if there is a downturn in demand. The House asked on a pretty well unanimous basis for some automatic linking of demand in the EEC to the level of imports.
We note what the Minister says about dominant suppliers. Will he bear in mind the need to reduce imports from dominant suppliers so that some of the poorer countries can gain access to this market which is, in many ways, dominated by Hong Kong, South Korea and Taiwan? Will he bear in mind in the negotiations that some of these countries excluding Hong Kong, have high tariff barriers against British exports?
On the most important question of the overall limit, the Minister confirmed that projected growth was likely to be about 1 per cent. in demand. Will the Minister confirm what is rumoured—that the Commissioners agreed to a 1·2 per cent. increase on the eight sensitive products, which implies a greater increase for other products and, perhaps, no limit on Mediterranean associates and other preferential suppliers? Is it the case that the likely increase to be permitted under this is nearer 5 per cent. than 1 per cent. and that this cannot be represented as a victory even in the Community before we get to Geneva?

Mr. Rees: I apologise if I misled the House by saying that the statement of the Commission representative was in the Library. I am now told that it is in the Vote Office. I hope, however, that it is equally available to the House.
I am flattered that the right hon. Gentleman said that I had skated delicately, rather than with heavy feet, on the question of global ceilings. The principles by which the global ceilings can, in the end, be determined were very largely resolved in the last ministerial Council, but it will be necessary, I think, to try to reduce those to figures. That is one of the principal reasons why it is not possible for me to give global ceilings here this afternoon. Furthermore, we felt it most important that the global ceilings should also relate to the other bilateral arrangements that have to be negotiated this year with the preferential or Mediterranean suppliers.
On the question of the anti-surge mechanism, it is much more important, rather than to get into almost a theological discussion about quotas which have been very largely under-utilised, to Focus instead on the level of imports. It is by reference to or linked to that that the anti-surge mechanism will finally be devised. Again, I do not want to go into too much detail because, as I am sure the House will readily appreciate, it will hamper the efforts of the Commission, which is engaged in very delicate negotiations, if its entire hand is spread face upwards on the table from the start of the negotiations. The whole House, and certainly the right hon. Member for Lanarkshire, North (Mr. Smith), will recognise that the Commission would be negotiating from a position of weakness.
On the question of anti-recession provision, a perfectly practical arrangement can be evolved from the principles laid down, but again I prefer not to go into the detail of

that because I think that it would prejudice the negotiations which are being undertaken on behalf of this country and the other countries of the Community in Geneva
The right hon. Gentleman is, perhaps understandably, robust on the position of dominant suppliers. Certainly the United Kingdom and the Community subscribe to the principle of differentiation in favour of the less developed, poorer countries. I believe that we should recognise the fact that Hong Kong, by contrast with all the other dominant suppliers, is a particularly open market, and this country has, for that and other reasons, a case for being especially tender of the interests of Hong Kong. However, the interests of all the dominant suppliers will have to be resolved in bilateral negotiations with them.
Coming back to the question of the overall limit and the question of growth, I cannot confirm any particular figure, for that, again, has finally to be resolved. But there was certainly agreement in the Community that the growth figure should approximate much more to the expected rise in consumption, and that will involve a much lower figure of growth, I believe, than the figure of growth under the existing MFA.

Sir Paul Bryan: My hon. and learned Friend has conceded that Hong Kong, with its open market, without protection of any sort, should be better treated than Taiwan and Korea, with their highly protected markets. I am not clear how Hong Kong is to be favoured in contrast with those other two countries.

Mr. Rees: My hon. Friend is quite right to draw attention to the point on which I laid emphasis not only today but also in the ministerial Council—that I think that Hong Kong is in a slightly different position. I cannot say at this precise moment in what way Hong Kong is to be favoured, because the position of all the dominant suppliers, including Hong Kong, will have to be resolved in bilateral negotiations subsequent to the conclusion of the MFA.

Mr. Richard Wainwright: I should like to question the Minister about the Commission's stance on enforcement and policing procedures in the new arrangement. The Minister is aware that under the present arrangement as it operates some gaps have been revealed in enforcement. Can he give any assurance that the Commission intends to press for more complete enforcement arrangements under the new scheme?

Mr. Rees: It is not just a question of laying down provisions for enforcement; there is also the practical question of ensuring that those provisions are enforced on the ground. The responsibility for that will lie very much with the customs officers of the individual countries. However, the United Kingdom customs has over the past 12 months recruited extra personnel precisely for this purpose.

Mr. K. J. Woolmer: Does the Minister recognise that the anti-surge mechanism's details are extremely important to the textile and clothing industries? If the permitted increase of this mechanism were to be, for example, 10 per cent. a year, does he not accept that that would still be capable of wreaking considerable devastation upon the textile and clothing industries over the lifetime of this agreement? Will there be an automatic trigger under the mechanism to ensure that any increase gets cut off and does not go well over the permitted level before any action is taken?

Mr. Rees: I recognise the anxieties about this matter. They have been particularly ably expounded to me, not only on this occasion, by the hon. Gentleman and by other hon. Members. The essence of this mechanism—for reasons that I have explained I do not want to go into too much detail—is that the imports in any particular year may be curbed by reference to the position in the previous year. In other words, account will be taken of the actual position and not of the theoretical or notional quotas.
I take note of what the hon. Gentleman says. It is our intention that, so far as possible, the mechanism should be triggered in certain fairly precisely defined circumstances.

Mr. Nicholas Winterton: I pay considerable tribute to the amazing grasp of the problems of the textile and clothing industries that has been attained by my hon. and learned Friend in the two months during which he has held his present office.
Is my hon. and learned Friend aware that over 100,000 people in these two industries lost their jobs in 1980? Will he appreciate, therefore, that the quota base levels upon which the MFA is to be established and the growth of quotas established are of paramount importance? Is it correct, as has been leaked to many newspapers, that the quota base levels are likely to be the 1982 levels? That would be unacceptable to the industry, because undoubtedly importers will inevitably pile in their imports to Britain to ensure that these quotas are established at a very high level, and this could be damaging to an industry which could, at present, employ at least 300,000 extra people if it were faced with fair competition.

Mr. Rees: I am very grateful to my hon. Friend for his kind opening words. I am deeply conscious of the loss of jobs in the textile industry. Indeed, I have, not once but twice, and even three times, I think, stressed to the Council of Ministers—going a little further than my hon. Friend—the fact that 150,000 jobs have been shed in the industry over the past 18 months, which I think goes beyond anything suffered in France or Italy, which consider, perhaps rightly, that they have slightly comparable problems.
I appreciate the anxiety about the level from which the new quotas, year by year, will start. I cannot conceal from the House that they will start from the 1982 quota level. I recognise at once that this will be a matter of disappointment. I did not conceal that fact at any point. But what is more important, and what I ask the House to focus on, is not the theoretical or notional quotas—any hon. Gentleman who has studied this subject will know that there is considerable under-utilisation—but to relate imports in any year to the imports in the previous year and to make certain, if there has been under-utilisation, that there cannot be a sudden take-up which would result in a surge.
It is precisely to counter that and to limit imports to actualities rather than to notional quotas that the surge mechanism—the United Kingdom can take some credit for having initiated this idea—has been launched, not on an astonished world but on an astonished Council of Ministers. It has been taken up and it will be the basis of the negotiating position of the Community in Geneva.

Mr. Barry Jones: What is the Minister doing to help the man-made fibre section of the textile industry? Does he know that already this year in my constituency 600 redundancies have been announced?

What is he doing to counteract American subsidised imports into Britain? As well as his amazing grasp of the matter, may we have urgent action?

Mr. Rees: I fully recognise the difficulties that are encountered in the hon. Gentleman's constituency and others. With his knowledge of the problems, he will realise that the multi-fibre arrangement is primarily designed to restrict imports from low-cost producers. The hon. Gentleman will be the first to recognise that the United States of America does not fall into the category of low-cost producers.

Mr. Anthony Grant: Is my hon. and learned Friend aware that in the negotiations he has taken a much tougher stance than was ever taken by the Labour Administration, which will be welcomed by the domestic industry because it will enjoy a degree of protection much greater than it had under the Labour Government?

Mr. Rees: I am grateful to my hon. Friend for having perceived an essential point. I do not wish to make unfavourable or unflattering comparisons with the Labour Administration. However, the negotiating stance of the Commission on behalf of the countries of the European Community is much tougher on this occasion than on the previous one. Provided that the negotiations are carried through to a sensible conclusion—I have no reason to doubt that they will be—there will be a greater measure of protection which will enable the United Kingdom textile industry to carry on the process of adjustment.

Mr. Joel Barnett: Is the hon. and learned Gentleman aware that the fact that he referred to the 1982 quota levels only in response to a question rather than in his original statement will cause great anxiety in an industry that is already worried not only about the Minister and the Government but about what happened in the past? Now that we and they know that the Commission is negotiating on our behalf the anti-surge mechanism becomes important. Although I recognise the importance of that and how much the Minister has done in trying to achieve it, the matter that will be of importance to the industry—perhaps the hon. and learned Gentleman will tell us about it—is how much flexibility the Commission has in negotiating the anti-surge mechanism given that it is starting from 1982 quota levels.

Mr. Rees: I know that the right hon. Gentleman has a deep constituency concern about those problems. There is no question of the starting point for the new quotas having been dragged out of me. The right hon. Gentleman knows—it may almost have been appropriate for me to anticipate the full statement and there was some indication from my right hon. Friend the Lord Privy Seal—that two days ago I received a delegation of councillors from the North-West, accompanied by the right hon. Gentleman, to which I gave a frank exposé of the position. The present Administration have never concealed the negotiating position. My hon. Friend the Member for Macclesfield (Mr. Winterton) can confirm that, because he was on the same delegation.
I recognise the sensitivity of the House, and of those right hon. and hon. Members who represent textile interests, about the operation of the anti-surge mechanism. It will be designed to limit surges. It would be more important for right hon. and hon. Members, and textile


interests outside, to concentrate on the real level of imports rather than on theoretical quotas that in many cases are not fully taken up.

Sir Hector Monro: I add my tribute to my hon. and learned Friend for his work on the problem during recent months. Will the agreement cover both coated and uncoated industrial gloves? Does my hon. and learned Friend envisage a reduction in the import of gloves and cloth from the Far East in the near future?

Mr. Rees: The answer to the first question is "Yes". I am tempted to say, I hope not frivolously, in answer to his second question "We must wait and see".

Dr. Shirley Summerskill: I hope that the hon. and learned Gentleman is not under the impression that the negotiations have ended satisfactorily. On the contrary, he has failed to deal with the serious problem of low-cost import. Until that problem is resolved, there will be little hope for the survival of the textile industry in West Yorkshire, which has passed through the worst year in its history, with mills closing and jobs lost. The problem must receive urgent consideration if there is to be any industry to save at all.

Mr. Rees: I am under no illusion that I can win the plaudits of the whole, or even a substantial part, of the House as a consequence of anything that I may or may not have done in Brussels. If I may put it in colloquial terms, this is a "no w in" situation for a negotiator. We must reconcile the interests of not only the textile industry but British exporters to the developing world, consumers and the Third world, I would need an adroitness far beyond that to which I lay claim to be able to balance those interests.
However, the negotiations have not been concluded. All that we have endeavoured to do in Brussels is to establish a common position from which the Commission can negotiate on behalf of the European Community at Geneva. Although there are some important points of detail that must still be resolved, we have given the Commission a tough but credible posture from which to negotiate at Geneva.
I am in no doubt about the importance of low-cost imports. I would not have spent so many days, not to say nights, in Brussels, Luxembourg and elsewhere discussing the subject if I were not profoundly convinced that it is necessary to moderate the flow of low-cost imports into Britain to give the textile industry a further opportunity to adjust.

Mr. Robert Atkins: During his discussions about the multi-fibre arrangement, has my hon. and learned Friend had the opportunity to consider the threat that is being posed to the weaving industry of Lancashire and elsewhere by the rumoured EEC penalisation of cheap but high quality yarn from Turkey upon which many British weavers, with their newer looms, rely?

Mr. Rees: I am aware of the position. My hon. Friend knows that Turkey is classed as a Mediterranean or preferential supplier. Negotiations outside those of the multi-fibre arrangement, but in parallel with them, will be conducted by the Commission with those suppliers during this year. I am sure that the point so cogently made by my hon. Friend will be dealt with by the Commission during those negotiations.

Mr. James Lamond: Has the Minister studied the reports of the debate in another place on 19 November about outward processing? Does he realise that outward processing represents a potential loophole in any agreement that could become important in the future?

Mr. Rees: I have studied what was said in the debate and I am aware of the importance of outward processing. The intention is that outward processing will be included within the global ceilings that we hope to set before the Commission.

Mr. John Farr: Will my hon. and learned Friend bear in mind that the EEC is already the largest importer of textiles and clothing from the developing world? Will he ensure during the negotiations that the fact is continually stressed that the EEC imports about three times the level of imports allowed into the United States of America?

Mr. Rees: My hon. Friend is right to stress that, absolutely and relatively, the countries of the European Community are the largest importers of low—cost textiles in the world. Therefore, some recognition of that should colour the negotiations in Geneva.

Mr. Bob Cryer: Does the Minister accept that the industry will have strong anxieties and reservations about 1982 imports being used as the basis for quota levels in the future? Can he confirm that the social clause, whereby International Labour Office conventions are applied, has not been abandoned by the EEC in its negotiations? Also, can he confirm that the EEC mechanism and operation of the multi-fibre arrangement will be more efficient and more rigorous than has hitherto been the case?

Mr. Rees: It is appropriate for me to confirm that the social clause will have some place in the draft protocol which the Commission hopes soon to issue. However, I must stress that if the social provisions were too rigorously drawn that would, more effectively than any quota, exclude imports from the low-cost countries. It may be that that is the hon. Gentleman's intention. I mention the matter because I believe that we must view it in perspective. I shall take on board the hon. Gentleman's point about the effectiveness or automaticity of the mechanism to which he referred.

Sir Anthony Meyer: Will my hon. and learned Friend welcome the recognition on both sides of the House that the EEC provides the most effective method of protecting our legitimate interests? Will he also note that Labour Members who are loudest in demanding further restrictions on imports from low-cost producers simultaneously accuse the Government of meanness in helping the interests of the poorest countries in the Third world?

Mr. Rees: It is true that the United Kingdom's interests are likely to be best protected if it is part of the Community. The Commission will have a greater negotiating strength by representing all the countries of the Community than any United Kingdom representative alone, however gifted or powerful. I too have sometimes detected a certain inconsistency between the positions adopted on separate occasions by certain hon. Members.

Mr. Greville Janner: In view of the catastrophic state of decline in the textile and clothing


industries in Leicestershire and other areas that have always depended greatly upon those industries, when does the hon. and learned Gentleman expect these proposals to take effect? Is he aware of the enormous urgency in this matter? Unless steps are taken swiftly there will be nothing left by the time low-cost imports are restricted, as his proposals hopefully suggest they will be.

Mr. Rees: The MFA expires on 31 December this year, but the bilaterals, which are perhaps of more practical importance, run out at the end of next year. On the other hand, the agreements with the Mediterranean preferential countries expire at the end of this year. That is why there is a certain urgency in the Commission's approach to those negotiations. I very much hope that the conclusions of negotiations, both on a bilateral basis with the various participants in the MFA negotiations and with the Mediterranean countries, will provide safeguards for the textile interests which the hon. and learned Gentleman represents and which I am sure he and the whole House are anxious to achieve.

Mr. Roger Sims: Further to his reply to my hon. Friend the Member for Howden (Sir P. Bryan), does my hon. and learned Friend accept that the present agreement has worked very much to the disadvantage of Hong Kong, which is an important export market and a colony for which we have special responsibility? Is there a case for applying some sort of recession clause to Hong Kong as a supplying country?

Mr. Rees: I recognise the special factors to which both my hon. Friends have drawn attention. Indeed, I have made that point on more than one occasion in the Councils. I believe that the United Kingdom should be particularly sensitive to the interests of Hong Kong. However, I emphasise that at the end of the day we must achieve a Community position, and the Commission will be negotiating with the dominant suppliers, including Hong Kong. I doubt very much whether it will be possible to negotiate some kind of recession mechanism in advance.

Mr. James Tinn: I take up the hon. and learned Gentleman's reply about the man-made fibres industry. Does he recognise that the problem of competition runs throughout that industry? The impact is felt not least at the raw material producing end, where firms such as ICI, in my constituency, are disadvantaged by subsidised oil enjoyed by their international competitors. Is that not particularly absurd, bearing in mind that at least we are self-sufficient? Will the hon. and learned Gentleman do his best to impress this point more effectively on his Government colleagues?

Mr. Rees: I certainly recognise the problem. This is not the first time that it has been brought to my attention. As the hon. Gentleman was graceful enough to intimate, this is not my direct responsibility. It is more the responsibility of my right hon. and learned Friend the Chancellor of the Exchequer and my right hon. Friend the Secretary of State for Energy. I shall ensure that the hon. Gentleman's pungent comments are brought to their attention.

Mr. Geoffrey Dickens: As the hon. Member for Halifax (Dr. Summerskill) said, the textile industry is particularly concerned about low-cost sources importing at particular levels. The whole industry is deeply concerned at the figure agreed for market growth throughout Europe. We think that will also reflect on the level that will be attached to low-cost source imports. Therefore, it does not matter how many days my hon. and learned Friend spends out there, he must come back with the right figures for the industry, otherwise there will not be a textile industry.

Mr. Rees: I reassure my hon. Friend, not for the first and probably not for the last time, that I am conscious of the importance of achieving the right growth figures. I and other Community Ministers have made that point in our deliberations. It is our intention that the new growth figures should relate more exactly to the anticipated growth in consumption in the European Community market.

Mr. John Smith: As the 1982 levels seem to have been conceded, will the hon. and learned Gentleman explain how any attempt will be made to stop countries from getting high levels for 1982 so that they can use them for future advantage? If anti-surge provisions are to be the effective protection for British industry, as the Minister seems to imply, does he appreciate that the percentages permitted will be absolutely crucial? The mechanism itself is not a sufficient protection; the percentages will be the test.

Mr. Rees: I am aware of the right hon. Gentleman's first point. We appreciate the importance of the basis from which the Commission will start. I do not want to go into detail about that, because it is a matter of some sensitivity and it will have to be explored in negotiation at Geneva. However, the point has not escaped our attention. Equally, I recognise the absolute importance of the figure thresholds and any anti-surge mechanism. I assure the right hon. Gentleman and the House that that point has been well taken on board.

Statutory Instruments, &c.

Mr. Speaker: By leave of the House, I shall put together the Questions on the six motions relating to statutory instruments.

Ordered,
That the draft Double Taxation Relief (Taxes on Income) (Zambia) Order 1981 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Double Taxation Relief (Taxes on Income) (Yugoslavia) Order 1981 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Double Taxation Relief (Taxes on Income) (Morocco) Order 1981 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Double Taxation Relief (Air Transport Profits) (Algeria) Order 1981 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft International Natural Rubber Organization (Immunities and Privileges) Order 1981 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Common Fund for Commodities (Immunities and Privileges) Order 1981 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Budgen.]

Orders of the Day — Transport (Finance) Bill

Order for Second Reading read

The Secretary of State for Transport (Mr. David Howell): I beg to move, That the Bill be now read a Second time.
The Bill deals with borrowing limits and other financial provisions for some of the transport industries. It is a short Bill, but it is none the less important, because it gives Parliament an opportunity to consider the finances of these industries, which play a major part in serving the needs of industry and the community.
Its provisions are in large part technical in nature. Clause 1 increases the British Railways Board's borrowing limit. The present limits which the clause will amend were set in 1974. The figure then was £600 million, and that was increased by order in 1979 to £900 million. The Bill increases the limit by £200 million to £1,100 million and provides for a further extension of £200 million by order.
Clause 2 is designed to enable the Government to continue to compensate the British Railways Board for the costs that it incurs in fulfilling the public service obligation imposed upon it by a direction under powers in the Railways Act 1974. Parliament set a limit on the exercise of those power; by placing a ceiling on the amount of compensation that could be paid. This limit was subsequently increased to £3,000 million in the Transport Act 1978. It applies to the cumulative level of grant paid from 1 January 1979. The Bill increases the limit to £6,000 million and provides for a further increase to £10,000 million by order. I shall say a little more about finance for the railways and other aspects in a moment.
Clause 3 gives the Treasury powers to guarantee the British Railways Board's liabilities if it becomes a member of EUROFIMA—the European Company for the Financing of Railroad Rolling Stock. EUROFIMA is a consortium of railway companies formed to finance the purchase of rolling stock. It also promotes collaboration on design, development and standards of stock. It is owned by 16 European railway administrations. British Railways are the only major company which is not a member.
A treasury guarantee of BR's liabilities would be a condition of membership. Because of these guarantees EUROFIMA is able to borrow on international money markets at keen rates of interest. I should emphasise however, that the Bill only provides an enabling power. Government approval would be required for the board to join and we would want to be assured that there was sufficient national advantage to make it worth while.
Clause 4 increases the National Bus Company's borrowing limit. This was fixed at £130 million in 1968 and subsequently raised to £200 million in 1975. The proposed increase to £250 million does not, of course, in any way keep pace with the rate of inflation since 1975 and reflects the view of the company that its level of borrowing is likely to diminish in the coming years.
Earlier this year my predecessor set the company a tough financial target and that will remain the real determinant of the company's financial arrangements.

That target is for the company to achieve by 1985 a current cost operating profit that is, before interests of £18·5 million at 1980 prices.
Clause 5 increases the limit on financial assistance to the Port of London Authority and the Mersey Docks and Harbour Company. I shall be returning to the clause in a moment.
First, however, I should like to say something about British Railways. The increase in their borrowing limit does not reflect any change in policy. Parliament sets a limit on the total amount of borrowing outstanding at any one time and inflation inevitably means that the limit is bound to be reached. But we should not take inflation for granted. When a borrowing limit is reached we should not just increase it in line with inflation, but look carefully at what we are paying for and what we can afford In fact, the overall borrowing of the board and its subsidiaries has, if anything, been falling in real terms. The increase in the money value of its borrowing reflects the increase in the money value of its investments. Nevertheless, the need to increase the borrowing limit from time to time gives Parliament the opportunity to review the position. We have only recently had a useful debate on railway investment.
However, the House will now expect me to report on developments. The trading position has, if anything, worsened beyond what was foreseen in the summer. The losses of passenger revenue are now such that the Government have concluded that they are beyond the measures which the board could take to recoup them within the year. I accordingly announced earlier today that the ceiling on the passenger grant for 1981 is being raised to a level £110 million above the level of the claim accepted at the start of the year.
That is a very large increase. It is a measure of the problems that the board has to face. So the position now is not merely that the Government have fully maintained the level of grant support to the passenger business. This year, as an exceptional measure, we have found it necessary to make a substantial increase, which carries the level of support well beyond anything previously paid.
Let there be no criticism that the Government are in any sense failing in their commitments to the railways. The Government will keep the position and the prospects under urgent review with the board. At the same time, the figures can leave no doubt in anybody's mind that the need for the management and unions to press ahead with changes to improve the financial position is very urgent indeed.

Mr. Donald Anderson: Does the Secretary of State not concede that that is no more than a short-term response to an immediate problem and is irrelevant to long-term investment matters—welcome though it is?

Mr. Howell: I am grateful to the hon. Member for his afterthought. Dealing with the short term, there are obviously a number of long-term implications, which I shall deal with during the debate, and about which my hon. and learned Friend the Under-Secretary will have something to say.
Returning to the short term, I pay tribute to what has been done this year in reducing manning levels on the railways. The situation demands the strictest economies in administration, the promptest adjustment of levels of


services, the most rigorous steps to control unit costs, and the earliest agreements on necessary changes in working practices. That is the immediate situation.
However, the great difficulties of this year must not prevent us from trying to look ahead. I do not think that the picture is as black as many claim and suggest in the House and, sometimes, outside.
In June my predecessor called on the board to produce a new plan for the inter-city business to achieve a fully commercial performance by 1985, and a start on the necessary changes immediately. I hope that the board will soon be able to put its plans to me.
I applaud the substantial progress during this year in the reduction of posts and manpower numbers on the railway—on this front the board is well ahead with its plans. The traffic losses are bound to require a continuation of these changes, and the completion of the detailed agreements to which there was commitment in this year's pay agreement is certainly urgent, but I pay full and unreserved tribute to what has already been achieved. The unions for their part must recognise the exceptional help that the Government have been prepared to give as evidenced by today's announcement.
I should like to say a word about the non-commercial railway. Here, too, we must have clear objectives. I am firmly resolved that by the beginning of 1983 we shall have a clearly separated grant for the London and South-East commuter services, so that all can see clearly the support for their services, and commuters can see clearly what they are paying for in their fares. It is a pity that we cannot do this more quickly, but it depends upon the board's ability to analyse its costs.
Meanwhile, I have taken the important step of opening for public discussion the objectives to which the board should work on those services. I have said that the board should not plan on ever-increasing real fares for commuters—fares above the rate of inflation. I think that all the evidence shows that the commuter does not want to go on paying higher fares for promises of a better service, and British Rail's own market research confirms that.
We must look for steady improvements in the commuters' top priorities, of reliability, punctuality and cleanliness. When I visited the Southern Region last Friday the general manager was able to report higher levels of reliability and punctuality than have been achieved for 10 years and cleaner trains as well. I inspected some refurbished coaches and saw that considerable improvement can be achieved at modest expense. At the other end of the scale, I saw the London Bridge signalling box—which itself improved punctuality by 10 per cent. when it came into operation—and this will be followed by the major changes that are going on in the large resignalling schemes at Victoria, on the Brighton line, and on the St Pancras line. No one can wave a wand—that is not being suggested—and produce dramatic changes overnight.
The reality is that there is certainly scope for improvement at current levels of investment. There is a way —as we can see from what is going on now—for the capable and dedicated management of the railway to produce steady improvement in what matters to the customer without making ever-rising demands on the traveller or the taxpayer.

Mr. Terence Higgins: My right hon. Friend referred to cleanliness. I fully acknowledge the improvements made in the other two areas to which he referred, but if he would care to visit the Coastway service from Brighton along the South Coast he would find that the standard of cleanliness leaves much to be desired. Ancient rolling stock is used and the standard of cleanliness in terms of day-to-day maintenance is lamentably low.

Mr. Howell: I should like to make as many visits as possible throughout the railway system. I am the first to concede that there is constantly room for improvement, but I thought it right to report that there has been some improvement. However, my right hon. Friend is right to remind me, the House and those outside that higher standards must constantly be sought and that there is room for them.
I hope that in replying to my consultation document all those concerned—and many are intimately concerned—will address themselves realistically to what can be done with the large resources available and to the improvements that are within reach and are, in part, already being gained. It is important to refer to the positive side of the picture, because, inevitably, one hears only the negative side and the weaknesses and difficulties. The considerable gains that are being scored, some of which I have reported to the House, are overlooked.
Clause 5 increases by £200 million the limit on Government financial assistance to the Port of London Authority and the Mersey Docks and Harbour Company. The House will recall that the Ports (Financial Assistance) Act 1981 provided for financial assistance not exceeding £160 million to be made available to the two ports. That figure included £70 million provided for in the Port of London (Financial Assistance) Act 1980 and a £3 million overdraft guarantee to the Mersey Docks and Harbour Company which my predecessor agreed to in December 1980.
To set the scene it may be helpful if I remind the House why the Government decided to provide financial assistance for the PLA and the MDHC to help them deal with their surplus manpower problems, and to enable them to continue operating while the manpower rundown and other measures were in progress. As my predecessor explained on Second Reading of the Ports (Financial Assistance) Act 1981 earlier this year, the position that the Government faced then was that these two major ports of national importance had suffered dramatic losses of traffic and were substantially overmanned.
Without assistance from the Government there was no way in which they could have carried on trading, yet it was unthinkable that the ports of London and Liverpool should simply have been left to go to the wall. The National Association of Port Employers recognised the special nature of the problems in London and Liverpool and, while it expressed reservations about limiting Government assistance to these two ports, hoped that the manpower reductions needed in them would be achieved. It was recognised that it would have helped no one if the Government had declined to provide the necessary assistance for London and Liverpool and the two ports had then closed.
I believe that the ports industry generally accepts that it was in the national interest, and in the interests of all other ports, to remove the threat of closure that was


hanging over our two biggest ports, to deal swiftly and effectively with the immediate manpower surpluses, and to work as rapidly as possible towards the restoration of their longer-term financial health.

Mr. Sydney Bidwell: In relation to the introduction of the new dock labour scheme, does the Secretary of State agree that no fault attaches to the trade unions, which have been anxious to enter into new agreements for a long time?

Mr. Howell: The new dock labour scheme is a matter for my right hon. Friend the Secretary of State for Employment. We are dealing with the fact of surplus manpower in the two ports. That cannot be escaped.
Our overriding aim throughout has been to bring to an end as quickly as possible the dependence of the two ports on public funds to keep them afloat. That remains my aim and, as I shall explain, I have given both authorities clear financial objectives to work towards in the coming year.
Hon. Members may ask again why we are not providing similar assistance to other ports. The answer is that there was an immediate crisis of unique size and scale in these two ports and that in no other port was it the case that the only way of tackling those problems was by means of Government funding. That is still the case. It may seem unfair to other ports that have been tackling their problems without Government help, but I do not think that it would be fair to the taxpayer for the Government to propose an extension of the arrangements. It would certainly not be fair to underpin or give support to schemes for nationalising all ports, or whatever is the official policy of the Opposition.
The Ports (Financial Assistance) Act 1981 was recognised by the House to be an emergency and interim measure—and was criticised on those grounds. It provided sufficient money only to pay for the immediate manpower reductions and to enable the two ports to continue operating, pending the detailed plans for returning to profitability which they were preparing. We received the corporate plans in August. I have now considered them and the comments from the two firms of accountants advising me—Price Waterhouse in the case of the PLA and Peat, Marwick, Mitchell in the case of MDHC.
The corporate plans are, not surprisingly complex documents, which contain a much detailed analysis of the commercial prospects for the two port authorities. They set out the measures that the PLA and MDHC see as necessary for a return to viability. Their main message is that further rationalisation and reductions in manpower are needed over the next few years. The Government therefore accept that further financial assistance is now justified only against that background of enabling both ports to put their affairs in order and cease burdening the taxpayer.
Much has already been achieved in both ports. About half of the assistance provided so far has been designed to help with the rundown of surplus manpower. Earlier this year the Government helped to finance a special supplementary severance scheme in both ports. The scheme was a considerable success, with more than 1,000 applications in each port. In addition, the PLA has successfully carried through a major rationalisation by closing the Royal group of docks, and the MDHC has negotiated significant improvements in its working practices. Such major changes would not be easy to carry

through at the best of times. In the present economic climate they reflect great credit on management and work forces in both ports.
Although much has already been achieved, both ports continue to need substantial help for severances and capital investment over the next few years, and to meet operating losses in 1982, but there must be a clear end in sight to the need for operating subsidies. I have therefore told the chairmen of both port authorities that it is my intention that grants for meeting deficits should not be available after the end of 1982. I have asked them to submit to me very quickly detailed action plans for meeting the Government's financial remit and breaking even in 1983. Only when we receive those plans can we specify the exact measures that will be needed next year in each port, or how the package of financial support in each port will be made up.
The figure of £200 million in clause 5 is my best estimate of the maximum amount of money that may be needed by the two port authorities over the next three to four years to enable them to become viable once more. I must emphasise, however, that there is no commitment to make that sum available. As with the earlier legislation, no part of the money is earmarked for either port, or any particular purpose.
It is important that the two port authorities should be subject to the commercial discipline of loan finance in their consideration of capital spending. I have therefore assumed that in future essential investments will be financed by loans, instead of grants as at present. The ports' financial circumstances, however, preclude the provision of loans under the Harbours Act from the national loans fund. I therefore intend making loans available under the powers in the Bill from voted funds, and I have made an allowance for this in arriving at the figure of £200 million. I must make it clear that there is a risk that these loans might not be repaid if the ports' finances do not improve.

Mr. Roger Moate: My right hon. Friend will appreciate that we shall need to study his last statement to understand clearly what he means. Will he explain exactly what he is saying about major capital expenditure by the Port of London Authority, if I may single out that authority, during the next few years? Is he saying that such capital expenditure will come out of the £200 million provision in the Bill?

Mr. Howell: That is correct. It will come by way of loan. The Port of London Authority cannot raise money under the harbours legislation, because its financial position precludes it from doing so. It will come out of the total sum of £200 million.

Mr. Eric Ogden: The Secretary of State will no doubt confirm that under the Ports (Financial Assistance) Act 1981 the money borrowed by the PLA or the Mersey Docks and Harbour Company was to be used solely and exclusively for redundancy and severance payments. That was the understanding at the time, and we asked many questions about it. The Secretary of State now says that large sums of money are needed for redundancy payments and for investment. Is that different from the Act of 1981, in that it can and will be used for investment, and not just for redundancy payments?

Mr. Howell: I do not want to mislead the hon. Member but I do not believe that there is a great difference. The


amount available under the March legislation was to cover severance costs, but it was also to cover any operating losses and essential investment requirements. I have already confirmed, in answer to the intervention of my hon. Friend the Member for Faversham (Mr. Moate), that the sum here is my estimate of the maximum amount that will be required to meet the needs and objectives that I have put to the chairmen of the two authorities, both in respect of their essential investment requirements and severances in relation to manpower reductions, and to meet the condition and objective that I have set, which is that there should be no deficits—in other words, a breaking even—by the end of 1982. In my estimate, £200 million is the maximum figure within which the pattern of action plans for the two authorities must be achieved.
Both chairmen had requested—as the House will know—a write-off of their capital debt to the Government. I have looked at these requests sympathetically, but I have told them that the Government cannot agree to this at this stage while there is no clear view of their future profitability. I am sure that the first task for both ports is to concentrate on those measures necessary to achieve a profitable port business. I have also promised to consider providing help with re-financing some short-term debt, though I cannot take a view on this until I see their action plans.
I know that I am asking the House to agree to make available very large sums of public money for two ports. Funds will be provided only to the extent that I am satisfied that they will assist the ports' return to profitability in line with agreed action plans. My Department will continue to carry out regular monitoring of the ports' progress and of their financial performance.
The Government remain committed to the policy that all our ports should compete freely with one another on the basis of price and service. Detailed control and central direction are not the ways to deal with the changes demanded by technological innovation and movements in the pattern of trade. Nor should the Government, in our view, seek to provide assistance where ports themselves are in a better position to find solutions to their problems. But we must recognise that London and Liverpool face particular problems on a scale not matched by any of our other ports.
Both are ports of national importance. Both are having to adjust quickly to a fast-changing environment, as are others, but neither can meet the costs of change from its own resources. The management and work force of the two ports have already achieved much in a short space of time. I believe that both ports can return to profitability given the continued commitment of management and work forces. Much now depends on the determination of the PLA and the MDHC to meet the objectives set by the Government. I think that it is in the nation's interest that they achieve these objectives, that any support from public funds should be designed to assist them to that end, and that where that support is for deficits it should have a clear termination date.
I have given in some detail the Government's purposes and thinking behind some of the key clauses in the Bill. I commend the Bill for Second Reading.

Mr. Albert Booth: In my view and in that of my right hon. and hon. Friends, the Government are placing the publicly owned transport industries in a straitjacket that is so tight that they will be forced to make savage reductions in services, particularly in their less profitable services, almost irrespective of the social hardship that they may cause and almost irrespective of British industry's need to have an efficient and modern transport system. To that extent, our welcome to the Bill in limited. We welcome it, mainly because it provides an opportunity to debate the Government's policy—or the Government's lack of policy; certainly, the Government's changing position—on transport finance, as they stagger from one crisis to another in various sections of the transport industry.
As the Secretary of State fairly said, the Bill puts financial limits on Government borrowing, to which certain public transport industries will have access, and on certain grants which might be made to major elements of the public transport industry.
Clauses 1 and 2, which deal with British Rail's borrowing and grants, have to be judged against a background of the massive decline that has taken place in British Rail, amounting to almost total collapse of certain important sectors. In that sense, British Rail can be said to be the foremost victim of the Tory Government's financial doctrine, which requires it to sell its assets, particularly any of its profitable activities, leaving it with the loss-making activities. I want to concentrate on the extent to which those borrowing limits will impinge on British Rail's investment programme.
The Government control British Rail's investments in at least three different ways. First, they set its investment ceilings. Secondly, they require the British Railways Board to submit to the Secretary of State any significant investment proposal for individual approval. Thirdly, the Government include British Rail's borrowing within the external financing limits that are set for it. That immediately poses the question of the extent to which the Secretary of State proposes to raise British Rail's external financing limits in the face of the increase in the public service obligation which he announced this afternoon. The PSO is part of the external financing limit, and if it is raised without raising the EFL, it merely means that British Rail's borrowing powers will have been chopped even further, at a time when they are disastrously inadequate to meet its investment requirements.
The inadequacy of the external financing limits is one of the greatest problems facing British Rail in its attempt to plan investment. Goodness knows, it faces enough problems in that area. In 1980—but using 1981 prices—British Rail's investment ceiling was £392 million. However, British Rail was able to spend only £371 million in investment. Of the external financing limit of £790 million, £699 million was taken up in public service obligation payments, section 20 grants and level crossing grants, and that left British Rail with only £121 million of borrowing to go towards its total investment expenditure. With the increase in the public service obligation that has been announced today, British Rail will have hardly any borrowing for investment left, unless there is a major adjustment of the external financing limit.
In 1981, the investment ceiling was set at £398 million. However, British Rail was able to spend only £308


million. In other words, it fell £90 million short of its investment ceiling because of the limits placed on British Rail's expenditure by the external financing limit. Even with those strict limits on British Rail's investment expenditure, the Government are still reducing dramatically British Rail's investment ceiling. At 1981 prices, British Rail's total investment ceiling in 1977, 1978 and 1979 ranged between £484 million and £487 million. In 1981, total investment spending has fallen to £400 million. That includes the continuous welded rail programme, which falls outside rail investment.
Two years ago, investment spending was 19 per cent. higher than it is today, although British Rail now needs to engage in a round of major investment, particularly in the electrification programme. Between 1979 and 1981, the ceiling was lowered from £484 million to £398 million. That is a cut of £86 million in British Rail's investment ceiling and it has been carried out by a Government who, in their 1979 election manifesto, said:
We want to see those industries that remain nationalised running more successfully and we will therefore interfere less with their management and set them a clearer financial discipline in which to work.

Mr. David Howell: I should not like the figures that the right hon. Gentleman has given for investment ceilings to stand uncorrected on the record. If I heard the right hon. Gentleman correctly, the figures that he gave were wrong. The investment ceiling stands at £325 million, which is the same level, in real terms, as that set by the Labour Govenment. Therefore, I do not understand how the right hon. Gentleman has reached his calculations.

Mr. Booth: I made it clear that I was citing prices that had been adjusted to the 1981 level. At actual prices, the board's investment ceiling for 1981—one of the controls applied by the Government—is £398 million. That includes expenditure on rail and expenditure on British Rail's subsidiary activities. Therefore, I was using prices that had been adjusted to the 1981 level. Between 1979 and 1981 the ceiling has been lowered in the way that I have described. I have taken account of the continuous welded rail programme, which does not come within the investment limits, but which must be included when making a fair comparison of total rail spending. If I had excluded that, the drop would have been even more dramatic than it is. I assure the Secretary of State that I have checked the figures carefully with the board and I shall be happy to make my figures available to him. Total spending has dropped dramatically.

Mr. Stanley Cohen: I hope that my right hon. Friend will press the Government to be clearer than they were in the statement about investment in electrification. Little has been said about that, although the issue is vital to the railway and transport industry and to consumers. The Government have been vague and they should clarify the situation.

Mr. Booth: I take that point and I shall turn to it shortly. I should make it clear that our complaint is not only that major impediments have been placed in the way of electrification investment, but that overall investment limits have been effectively cut, by making the external financing limit so tight that even the limited investment ceilings set for British rail cannot be reached. The amount of borrowing left within the ceiling prevents British Rail

from reaching that investment ceiling. British Rail cannot finance the whole of its investment programme for the 1980s from money that it generates from its activities.
British Rail's estimate, which has been fairly set out in the document on rail policy that has been submitted to the Secretary of State, suggests that the ratio of money generated to money borrowed to finance the rail programme, is about 2:1. In other words, one third is borrowed money and two thirds is internally generated money. I hope that it will not be argued that British Rail does not need to have access to borrowing in order to carry through its major investment programme. That programme is necessary not to improve the railways, but to save them. Many of the items that are classed as investment are replacements for essential elements in the system.
I shall quote from a speech that the Secretary of State made in a recent debate on British Rail investment. He said:
We need a highly efficient railway as an integral part of our national transport network.
A little later—although I hope that he will agree that these words are not out of context—he said:
it depends on mobilising new investment funds to keep modernising the system."—[Official Report, 26 October 1981; Vol. 10, c. 614.]
I entirely agree with the Secretary of State and we are as one on that point. We need a highly efficient railway system as an integral part of our transport network. We shall not achieve that unless British Rail can mobilise the necessary investment.
However, the Secretary of State and his predecessor have torpedoed a major part of the investment programme. I refer to electrification. They have done so by rejecting the joint study made by the Department and British Rail on the major electrification options for the main line network. They have refused to approve any of the five options and have told British Rail to go away and start again. The Government have said that they will set different criteria in order to examine electrification on a line-by-line basis. Therefore, the Government have rejected the major electrification options. Two years' detailed work has been wasted.
In addition, the Secretary of State and his predecessor have not reached a decision on the East Anglian electrification project. That project was submitted to the previous Secretary of State in November 1980. It has been tested and questioned in every way by the Department of Transport. No more questions can be asked. However, a decision is still awaited from the Secretary of State. That project stands on its own and was to be considered outwith the main line electrification programme.
There is no excuse for the Secretary of State's failure to make a decision. It would have been wrong, at any time, to hold up such a scheme. However, when that decision may determine whether we can sustain an expert team capable of carrying on our rail electrification programme, the refusal to decide is a major blow to an industry on which the future development of electrification depends. It also reflects the Secretary of State's failure to respond to the desperate proposition put to him by the chairman of British Rail. He approved the modest extension of electrification from Hitchin to Huntingdon. At least that was part of an electrification project that could have held together the team of specialists that was capable of sustaining the electrification programme.
The Balfour-Beatty Power Construction company has been told by British Rail that it has no more work for it. Notices have been issued to members of the team, and the team will be wound up. It will take a year to put that construction team together again. Not only is that a loss to our railway system; it is a loss to the power construction industry. Without a home base, it is doubtful whether it will be capable of obtaining any part of the £750 million worth of international contracts for which companies will be tendering in the next few years. That is a tragic waste of the expertise that exists in British Rail to research and develop modern railway systems.
If the Government had the foresight to see the extent to which, by investing in British Rail, we could build up many other parts of our economy, certainly in related industries, by selling British Rail expertise around the world, they could make a significant contribution towards solving some of the major problems of the present recession.
The Secretary of State properly spoke about the cooperation of the unions in manpower cuts by British Rail. I agree that there has been enormous co-operation during a tremendous rundown in manpower. But the Secretary of State is not likely to receive very much more such cooperation unless there is agreement on a future investment programme. It is all give by the unions and all take by the Government in this arrangement. The Secretary of State may soon face opposition from the railway unions. If he wants more manpower cuts, he must approve an investment scheme so that the cuts can be made intelligently. The scope for further productivity depends very much on the extent to which further investment in the system will be authorised. Clearly, if there are to be major savings in manpower, there must be investment in electronic signalling, and so on. If the Secretary of State tells British Rail to make manpower savings and operate outdated collapsing stock with even less manpower, he will finally get the answer that that is not on.
I noted with interest the Secretary of State's attitude to the financing of the public service obligation part of the operation. He reminded the House that commuters in the South-East do not want to continue to pay higher fares. I say to him "Welcome aboard". For some time, we have been preaching that the use of the system is sensitive to fare policy. We might even convince him about the low fares policy that is being pursued by the GLC. The scheme in South Yorkshire also has merit.
The Secretary of State spoke of having separate accounts and I can understand why that is attractive to him. However, we must not be misled into believing that, by having separate accounting for the degree of public support for South-East commuters or other rural services, we can treat them as though they were in a different world. They are not. The main line railway network depends to a considerable degree on the feeder system of the other parts of the total railway system. If we cut off the branch lines and parts of South-East commuter land, that will impinge upon the main line business.
The Bill deals with other aspects of publicly owned transport, in particular with the National Bus Company, which is being attacked on three points of the compass. It is being hit by the recession and it is suffering from the reductions in public transport support, and from the effects of the Transport Act 1980. The Secretary of State has set

it a financial target of achieving a profit of £18·5 million by 1985. That will require massive service cuts. In its submission to the Select Committee, the National Bus Company reported that it envisaged cuts of about 60 million service miles having to be made.

Mr. Anderson: There is a fourth point of the compass. There is a real danger that in their further privatisation measures the Government will insist that NBC's express and profitable routes should become private, depriving the NBC of its major revenue earners.

Mr. Booth: I should not wish to enter into an argument with my hon. Friend on how many points there are on the compass. I take an amateur interest in navigation and I admit that there are many more points than three. However, I take my hon. Friend's point that the National Bus Company will have to reorganise its services in such a way as to make a considerable reduction in its profits on express routes.
The point that the House must appreciate is that those cuts of 60 million service miles will not be made in the express services. The NBC is expanding in that area. The cuts will all be made in the rural areas or, to a limited extent, in off-peak urban services. The cuts will attack those parts of the country that can least afford, in social terms, to sustain a cutback in their transport provision.
The National Bus Company is to be required to service its entire commencing capital debt each year, which it has had to do from the outset. But the interest payments on that debt have risen in actual prices from £4·8 million in 1969 to £17·2 million in 1980. In operating terms, just to pay interest, it will have to earn £1,065 a year on every bus that it runs, as opposed to £233—at a time when the Secretary of State is realising that people do not want to pay higher fares.
I suggest that the study that he has made of South-East commuter land could be carried out on a wider basis with some advantage to the NBC. Not only will it have to find the greater interest payment, but it will have to do so with less transport supplementary grant support. That grant has been cut by 10 per cent. for 1981–82. If the Secretary of State hopes that the National Bus Company will get anywhere near the financial target that he has set, it will be necessary to raise transport supplementary grant in order to reach some agreement with those counties that have applied for so little towards revenue support services. Unless there is a major change in the transport supplementary grant revenue support regime, he will soon be faced with a financial restructuring requirement for the NBC.
The Bill refers to the Mersey Docks and Harbour Company and the Port of London Authority. The company has an outstanding debt of £63 million on which it pays interest of about £5·5 million a year. It will have to attempt to pay back interest from what by any measurement is a much contracted base of operation. Last year it had a loss of £6·25 million. It can be argued that that loss was the result of special circumstances. However, its trading position has worsened considerably since January. If there were ways of dealing with the problems that it faced last year, they are not necessarily available this year against the financial prospects that the Secretary of State holds out.
I shall refer to some of the changes that have taken place since January. The Manchester Liners' container service,


which was acquired by the Tung Group, has been transferred to Felixstowe. The Johnson Scanstar container service operation has been centralised in Felixstowe. That is at the expense of both the company and the Port of London Authority. The shipping companies that form the United Kingdom-East African Conference have decided to put their general cargo into a container service which will operate from the East Coast. That will lead to a withdrawal from Merseyside.
Following the closure of the refinery at Ellesmere Port, the Burmah Oil Company has stopped importing oil into Merseyside. Tate and Lyle, having closed its sugar refinery in Liverpool, no longer imports raw sugar and no longer exports refined sugar. Last but by no means least, there is now the prospect that P & O will no longer operate the Liverpool-Belfast ferry service. These are all changes that are detrimental to Merseyside trade and they have all taken place since 1 January. A short-term subsidy of the trading loss for this year will not put the company in a position in which it is able to meet the Secretary of State's financial targets.
Unless the right hon. Gentleman reconsiders his predecessor's decision, he will continue to try to operate without a national ports policy and without a national ports council. In doing so he will fail to tackle the root problems of the ports.
The position of the Port of London Authority is, in some respects, even more grave.

Mr. Moate: Perhaps the right hon. Gentleman will explain how he would have prevented from taking place the transfers of trade by commercial operators that he has described if he had had a national ports policy?

Mr. Booth: If we had a national ports authority or a national ports council that had the power over port operations that the Secretary of State has over British Rail operations in approving or rejecting investment, a policy could be operated of allowing investment in port developments that would make sense. The investments that have taken place recently in port developments have not made sense. They have created flourishing ports in places where there have been shortages of other facilities, but they have deprived other places, including Merseyside and London, of port activities. They have created industrial and social havoc in those areas.
I know that the hon. Member for Faversham (Mr. Moate) takes a continuing and serious interest in transport matters. However, the Government's refusal to operate a mechanism that would be a proper role for a national port authority does not absolve them from having to take decisions on port finance. On the contrary, the Bill makes it clear that they still have to provide port finance. They will have to do so at a time when they are picking up the pieces and trying to deal with the damage that has been done by the free market approach to transport.
If there is an argument for financial restructuring for the Mersey Docks and Harbour Company, there is an overwhelming case for the restructuring of the Port of London Authority.

Mr. Higgins: Under the right hon. Gentleman's national scheme, what would he envisage happening to the size of the Liverpool labour force, given the change in the pattern of trade to which he has referred?

Mr. Booth: A national scheme would have had to cope with the most massive rundown in the labour force.

Intelligent investment in the container system in the PLA, in Liverpool or in any other area will greatly reduce manpower requirements at the jettyside. I faced that problem as the Secretary of State for Employment. I laid before the House a new dock labour scheme. I recognise the relationship between the two problems. It is necessary to proceed by way of a national dock labour scheme as well as by making provision for port investment.

Mr. Robert Parry: Does my right hon. Friend accept that since the beginning of 1979 the labour force in the Liverpool docks has been cut by nearly half?

Mr. Booth: I accept readily that there have been substantial cuts in the Liverpool and London labour forces. There have been cuts in almost every port labour force other than at Southampton over the past 10 years. Some of the cuts have been drastic. The cuts in London have resulted in a dramatic contraction of the base of activity over the past few years. Since the Government took office we have had the closure of the India, Millwall and Royal docks. The Port of London Authority operation is now confined to Tilbury. It has gone down river to Tilbury and there is nowhere else that it can go. It has arrived at the place where it must make its last stand as an authority.
The Secretary of State says that there will be no grants to cover deficits incurred by the PLA beyond the end of 1982. He should examine his predecessor's record. He said at first that the PLA did not need further financial assistance. Later he said that the only assistance that was required was that of funding the London redundancies. He listened to objections expressed by hon. Members on both sides of the House who tried to tell him that that approach would not work. He was told that it was not realistic and that he would have soon to provide aid for Liverpool as well. In due course that had to be done, but the aid covered redundancies only.
The present Secretary of State is now saying that additional aid must be made available for London and Liverpool. Redundancy terms have spread to other ports. The Government are being pushed stage by stage from their previous stance. When will they take an overall view of the industry and recognise the dramatic changes that it has undergone? Those changes have applied to technology and trading patterns. The Government cannot continue their ad hoc policy.
I do not think that the PLA can become commercially viable by the end of 1982, especially while it is carrying the cost of servicing a debt of £110 million, much of which represents what are now dead assets. It will have to reorganise in Tilbury. It will have to face the massive problem of financing the huge amount of redundancy that has taken place. There has been a huge change in the ratio of retirement pension pay to the size of the work force. It is not possible for the authority to face those problems and at the same time to achieve viability by 1982.
The container revolution is going ahead. That has not been stopped by the recession. There is still traffic moving from general cargo to the container system. It is moving at a greater speed than most of us foresaw. It is proceeding with such thoroughness that it is now conceivable that the number of men required on the jetty in future container operations as compared with the old general cargo operations may be about 10 per cent. of historic labour forces. That is such a dramatic change that it cannot be


encompassed within the normal financing arrangements which would be made for redundancies. It is a greater cutback than any of our manufacturing industries have faced, even with the great capital intensive developments in manufacturing. That problem is not peculiar to London.

Mr. James Hill: The right hon. Gentleman has said that the Government should have a complete rethink on the port industry in general. Does he not agree that one of the greatest obstacles to harmony in the ports, particularly in my constituency, is that it is time that the Government in the person of the Secretary of State looked again at the national dock labour scheme and brought it up to date?

Mr. Booth: I agree entirely, but the hon. Gentleman is pushing at an open door. I proposed that to the House when I was a Minister and I still believe that the national dock labour scheme is outdated and will not meet modern terms. I left a power for the Secretary of State on the statute book. It is his statutory duty to lay a new scheme before the House. He has not carried out his duty. I hope that he will do so.
I should like the Secretary of State to consider my final point about the PLA. As he is the Secretary of State for Transport, I urge him to consider and at some time let the House have his views on the role of the PLA in relation to the development of the economy of the South-East of England. He is giving priority in his road programme to the completion of the M25, which will form a natural link with Tilbury. Given that and the proportion of freight to ports that is now carried by heavy lorries, the success or failure of Tilbury will be a matter of concern not only to the dockers but to all those who want to see a regeneration of the South-East region. I say that as one who represents a Northern region constituency which has had some experience of a loss of port activity. When the British Transport Docks Board terminated the commercial activities in Barrow docks, I and others in that area saw the effect on industrial development. Therefore, we are talking about the problems not only for dockers and shippers—they can go to other places—but for those who develop industries and depend upon having access to ports. They are vitally interested in that question.
We shall deal with many more detailed issues in Committee. However, we are starting from a difficult situation. What is clearly needed is a far-sighted, courageous policy to ensure that we have a modern and efficient transport system. The Government stagger from crisis to crisis with temporary stop-gap measures that are unco-ordinated, while the life is being strangled from public sector transport by monetarist policies. In Committee we shall put forward what we believe to be sound Labour policies. We shall campaign for realism in the financing of public transport.

Mr. Roger Moate: I agreed with the right hon. Member for Barrow-in-Furness (Mr. Booth) when he described the Bill as a temporary stop-gap measure. Some of my criticisms will follow that line. However, I disagreed with almost everything else that he said, particularly his ritual genuflection in the direction of a

national ports policy. Even that lacked conviction because he conceded clearly the reality of life and the improvements of trade and traffic in the ports industry.
I should have thought that the right hon. Gentleman could be a little more generous about British Rail and the Secretary of State's policies. He should have welcomed the additional support given by the Government to the passenger operations this year. An increase of £110 million in the public service obligation is a significant contribution. It will be warmly welcomed by all commuters and passengers. I asked the right hon. Gentleman to consider what would have happened if that grant had not been given. Substantial fare increases would have been needed. They have been avoided. I thank my right hon. Friend for that.
I also thank my right hon. Friend for having made it clear that the Government believe that commuter fares should not increase in real terms. We cannot avoid the inflationary increases, but I welcomed that clear statement of Government policy.
The right hon. Member for Barrow-in-Furness described Government policy as a straitjacket. That was a strange word to use. When one considers the Bill and the amount of money that it provides for the nationalised transport industries, one realises that it reflects a rather large nightshirt in which there could be an orgy rather than a straitjacket. The money involved is considerable. In addition to the £110 million, there is an extra £200 million for Merseyside and the PLA. Clause 2 provides for a sum not exceeding £10,000 million, representing the total compensation that may be paid by the Government. That is a cumulative figure but it reflects the enormous public support given to the railways.

Mr. Ogden: The hon. Member for Faversham (Mr. Moate) is usually careful to say exactly what he means and to mean exactly what he says. Will he look at the Bill again and show me one dot or comma that shows that by the Bill the Government are committed to spend one brass farthing? From beginning to end the Bill is dotted and indented with "ifs" and "and" and "may" and "perhaps". It is an enabling Bill. Not one penny of hard cash is committed to any of the enterprises in it. It mentions only measures that are to follow later at the discretion of the Government.

Mr. Moate: The hon. Gentleman may be technically right, but politically he is hopelessly and completely wrong, and he knows it. Whenever did a Bill prescribe a ceiling of expenditure which was not reached or exceeded? I wish that the hon. Gentleman were right and that the money would not be spent. However, he and my right hon. Friend the Secretary of State know that it will be spent. That is why I regret it when it is said that the £200 million is available but need not be spent. It will be spent.
I shall make a few remarks about the railways. I shall try to be brief as I know that many hon. Members wish to speak. We have recently had a debate on rail investment. I regret certain recent developments. I share to a certain extent the views of the right hon. Gentleman on rail electrification. It is absolutely right for the Government to maintain strict control over the programme and to lay down strict conditions. However I feel that my right hon. Friend and the Government are losing control if the breakup of the electrification team is allowed to proceed.
That investment programme must ultimately reflect profitability and show a proper return. However, is it


reasonable, on the one hand, to say that passenger revenue is so bad that we must put in an extra £110 million as an emergency measure and, on the other, to say that British Rail must produce evidence of profitability to justify electrification? I do not believe that my right hon. Friend can honestly expect to have any modernisation programme on the railways if we apply such tight conditions in the present economic circumstances. If we are to proceed with better productivity deals and if we receive a response from the railway unions and the management, we have to show willing and take a positive initiative to ensure that the electrification programme proceeds.

Mr. David Howell: I have listened very carefully to my hon. Friend and I agree with a great deal of what he says about the programme. The Government have asked that there should be plans for profitability in the main part of the railway business by 1985. The Government have committed themselves in principle to the 10-year rolling programme for electrification. The Government have asked for the electrification schemes to be brought forward. I am awaiting those schemes, but they have not yet been put before us.

Mr. Moate: My right hon. Friend will know of the newspaper report which stated:
'Every time we answer a question, we get 10 more back,' claimed a senior BR executive this weekend.
I understand why my right hon. Friend insists upon a viable long-term programme, but he will not have any type of programme if the teams necessary to carry it out are broken up in the meantime. I have great faith in Sir Peter Parker's business common sense in this matter. It surely makes sense to allow British Rail to proceed with a modest programme in order to keep the teams in being. I emphasise that point.
During the last debate on railway investment I suggested that the Government should pay greater heed to the idea of allowing private finance to be introduced in the form of leasing finance. I suggested that the new locomotive programme should be financed by leasing arrangements, as was done during the early 1970s. By that means British Rail could expand its investment programme considerably without necessarily affecting the public sector borrowing requirement. I believe that the same can be done on railway electrification.
I recall the powerful speech of my hon. Friend the Member for Hereford (Mr. Shepherd) who I understand was describing the plans submitted by the companies concerned which suggested that much of the electrification work could be carried out by using private finance. If that option is open to us, I urge the Government to seize it because if we do not have investment of this type we shall close all the options for a modern railway system. I become extremely worried that we shall lose the initiative which has been built up in recent years. I am not saying that the railway industry is happy—it has not received all the money it wanted—but, broadly speaking, I believe that we have been going in the right direction.
I turn briefly to the matter of the ports and docks. I am very disappointed that again there is a Bill of this type before the House I suspect that my right hon. Friend takes no pleasure in that, but I feel that at this stage we could have expected a more complete and positive package. We are entitled to look back over the past two years and express some disappointment. In two years we have had three Bills on this subject.
In 1980 we had the first port of London Bill. I do not need to quote the remarks of my right hon. Friend the Secretary of State. He made it clear in 1980 that he expected the port of London to operate within these cash limits, which then amounted to £70 million. A year later we had another Bill calling for a further £90 million. We heard the same stern injunctions and fairly optimistic statements that that would be enough to carry it through. Many Conservative hon. Members defended what were, in some ways, indefensible measures because we believed that there was an emergency and that this would be the last word.
The Bill before the House today—the third in two years—seeks a further £200 million. I shall refer later to that figure, because my right hon. Friend must give more facts to the House about it. It is clear that this will not be the last word. My right hon. Friend has said that he is not prepared to accept financial reconstruction at this stage. It is therefore clear that before long we can expect further legislation.
That is a most unsatisfactory way for Parliament to proceed. It is also a most unsatisfactory way for the management and the workers in the ports to proceed. Of course, the ports have faced decline and depression. It has been a very difficult time. Many of us believed, however—here I restrict my remarks to the port of London—that having reached this stage we should be able to look forward to a brighter, more optimistic future. The port of London has a great future. Tilbury has a great future. The riverside wharves have a great future. The port of London is still our greatest port. Those who work in it should by now have a clear future mapped out before them.
All that we have is yet another transfusion—it is becoming almost like a drug—provided by the Government, without any clear sense of direction. The first measure, in an emergency, was perhaps fair enough. A second measure, in another emergency, is perhaps also fair enough. But three in two years begins to look like a habit—and a bad one at that. I am most disappointed. I believe that the way in which the £200 million is being provided is wrong for both London and Merseyside and discouraging for the rest of the ports industry. In this connection, I wish to put a number of points to my right hon. Friend.
I presume that the £200 million, with the emphasis upon provision for severance, means that London and Liverpool are to receive special help in the severance of their dock workers. My right hon. Friend should even be able to give figures. He must have some idea of how many employees, registered and unregistered, are involved at the two ports. Clearly there is to be special treatment for those ports. Although we defended differential treatment on the last occasion, I do not believe that we can again defend the introduction of differential severance rates for London and Liverpool but not for other ports. We defended it last time, but by the summer the industry had been forced to introduce a further scheme at its own expense, not at Government expense, to close the gap because one could not have redundancy payments of £16,000 in London and £10,500 in Bristol.
Yet the Government are doing the same thing again. How can we expect port employers throughout the country to secure demanning and reductions in the numbers of jobs when the employees believe that they will again be able to secure higher redundancy terms if they wait a little


longer? This is a most untidy, unhealthy and unhappy situation and I do not believe that it will work. Indeed, I suspect that as our debates continue, in Committee and on Report and with the industry outside, it will become clear that it simply cannot work.
It is unfair that other ports should have to bear the full cost of redundancies through the levy when for London it will be fully financed. At what level will the figure be set? The scheme in London produced about 6,000 voluntary severances at a figure of £16,000. Will that be the figure in future or will it be higher? Again, we are entitled to know what figures my right hon. Friend has in mind.
My right hon. Friend touched upon the subject of capital expenditure. I am concerned that the port of London should be viable and should survive as a flourishing port, but it must be on a fair basis. One cannot expect other ports to accept that the PLA should be subsidised. Yet I gathered from my right hon. Friend that the £200 million will in effect provide further capital subsidies in terms of new investment over the coming years, whereas other ports will have to finance this in the traditional manner.
That is a significant change from what we were told in our previous debates. Frankly, I dispute whether my right hon. Friend is correct in his interpretation of his powers. The Ports (Financial Assistance) Act 1981, upon which this provision is based, does not appear to me to provide powers for major capital spending. It refers to
measures taken by them to reduce the number of persons employed.
That is quite clear. It goes on to state that it provides
for the carrying on of their undertakings while such measures are being taken.
I suggest that the phrase
the carrying on of their undertakings
does not provide, within the normal meaning of the English language, for major capital investment. I hope that it does not. I am sure that both London and Merseyside will need new capital investment. However, it must not be achieved by the sort of blank cheque that my right hon. Friend is securing from Parliament. The sum of £200 million is colossal even in relation to the needs of the two ports. This is not the proper way to proceed.
I emphasise my great disappointment that we are not in a position now to map a clear path for the future for the port of London. We could have done it; we should have done it. This would have involved capital restructuring. It is unrealistic to expect London to continue to carry debts of £110 million and also achieve viability at the end of next year. The whole package lacks credibility and conviction. It causes confusion in other parts of the port industry. At the same time, £200 million of the taxpayers' money is taken without any clear justification. That is a very large figure.
I understand the need at this stage to provide further financial support for the ports. I am, however, disappointed about the way it has been done. I hope that during the progress of the Bill my right hon. Friend will be able to break down the figure and explain it more clearly to Parliament and to the people. In that way he will perhaps make some of us happier than we are at present.

Mr. Robert Parry: I welcome the financial assistance that the Bill means to the

ports of London and Liverpool. I declare my interest. I am a sponsored member of the Transport and General Workers Union, and the Liverpool docks, or what remains of them, are situated in my constituency. Many of my constituents are employed on the docks.
We would like to ensure that other United Kingdom scheme ports which need financial help are included in the Bill's provisions. The effects of the continuing recession on dock labour scheme ports, aggravated by the expansion of non-scheme undertakings, are putting the future of many ports in jeopardy. The refusal by the Secretary of State for Employment to take the necessary legislative action, which would permit progress to be made towards the introduction of a new dock labour scheme, as required under the 1976 Act, has given licence to the non-scheme undertakings to take cargoes away from the traditional ports. The loss of traffic has created an increased surplus of registered dock workers in ports throughout the country. This is having a serious adverse effect on the operational viability of the ports. The provision of financial assistance should not therefore be restricted to certain ports, as the Bill proposes.
The Secretary of State for Transport has stated that the provisions to increase the limit of money available to London and Liverpool will enable the two ports to carry out capital expenditure programmes and cover running losses and severance payments. The latter item is no doubt included because the provision of financial aid is tied to further substantial reductions in manpower at the two ports. If severance payments are again introduced, as happened in March and April this year—payments that are more beneficial than those that apply in the rest of the scheme ports nationally—and without consultation or reference to the national joint council for the port transport industry, there will no doubt be a reaction by dock workers and port employers similar to that which occurred under the Ports (Financial Assistance) Act 1981.
The important issues of jobs and future employment cannot be dealt with unless there is full consultation and the involvement of both sides of the dock industry. There is no doubt that the ports of London and Liverpool need financial help. By the same token, so do many other ports. Their problems are similar. Provision must be made for all ports that are suffering the effects of the present unsatisfactory situation in the port industry, brought about by the failure to introduce a new dock labour scheme and aggravated by the trade recession.
I wish to deal with a couple of points concerning Liverpool and the Mersey Docks and Harbour Company. At the beginning of 1979, there were 6,007 registered dock workers. Of these, 3,772 were employed by the Mersey Docks and Harbour Company. The latest figures given to me recently are 3,414 registered dock workers employed in the port, of whom 2,262 are employed by the company. As my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) pointed out, there have been tremendous losses this year alone. The Tate and Lyle closure will mean an annual loss of £1·2 million to the revenues of the Mersey Docks and Harbour Company. If the Liverpool to Belfast ferry is not reopened, that will mean a further £1 million loss of income, bringing the total to nearly £2¼ million in less than one year.
The Secretary of State's recent statement makes clear that the granting of this financial assistance to the port means substantial reductions in labour. I understand that a figure of about 500 has been mentioned in respect of


Liverpool. I must warn the Secretary of State that if any gun is held at the heads of Liverpool dockers, this will be resisted by the workers. The right hon. Gentleman will appreciate that Merseyside has nearly 20 per cent. unemployment, with 130,000 people out of work. The carrot or bait of severance pay, used many years ago for dockers in Liverpool, will not be taken so lightly now.

Mr. Geoffrey Dickens: I should like to start by referring to matters that affect the public most. We are discussing high finance, but the public are interested in three elements. One is reliability. Most people, when they go to catch a train at a certain time, expect it to arrive at that time or thereabouts. Some passengers are anxious about punctuality. When they catch a train, they want to reach their destination on time. The train often links with a departure from an airport. They also have to arrive at work at a certain time. Most people also expect clean carriages.
Over the last few years I have seen tremendous improvements in British Rail. The greatest improvement has occurred in inter-city links. The carriages, service and punctuality seem to be very good. The stations also seem to be operated efficiently. A considerable sum has gone into British Rail. The £10 billion ceiling set for public money is a king's ransom, but it is money well spent. It is a service to the nation, which has been kept in line with inflation.
Our policy has not changed, but we are still making provision for the same amount of development and procurement for rolling stock and wage levels. This has been necessary to keep in step with inflation. It is a matter not of finding more money, but of finding enough and making a commitment to keep British Rail up to and progressing at the standards achieved over the last few years. If that continues, we should be well pleased.
This is a small island. There is nothing complicated about the spread of our cities. An island such as this ought to have a first-class rail system. I mourn the passing of the days of the GWR and LNER. But I must not dwell in the past, I must go forward. There was competition in the past between the railway companies. Nevertheless, the railways are progressing and the money has to be found.
The Government's commitment to the future of the railways amounts not only to money for investment. Any commitment to the future of the railways must include improvements in productivity. The Government, since they came into office, have made tremendous strides. When we negotiated the 1980 pay award, for instance, we set targets to shed about 38,000 posts by 1985. We have already achieved about 14,000 job losses. Many of those were from the loss-making areas, such as the carriage of parcels, and so on.
We are now in the middle of negotiations for the 1981 pay settlement. The unions are working closely with management in seeking to achieve greater productivity. That is common sense, because their future depends on the success of British Rail. Their success is our success, and vice versa. The relationship between trade unions and management is vital. It is nice to see the nation thinking in that way. A few years ago, the argument was across the table; now we seem to sit round the table to negotiate. That is much better and more sensible. We shall all be the winners in the end. Confrontation between trade unions and management is of no use to anyone.
Things are moving nicely. There are one or two matters on which the trade unions have agreed and are making progress. For example, on open terminals—unmanned ticket barriers—two pilot schemes will start later this year, with the agreement of the trade unions—one in Scotland and one in the West Country. I hope that they will be a success.
Another subject is flexible working hours. Employees of British Rail used to work many hours of overtime on some days, and on other days of the week, because of the overlap on their schedules, they worked less than their required eight-hour day. That was uneconomic. It cost a lot of money. British Rail is now working towards more flexible working hours with a much steadier use of manpower without excessive overtime payments. That seems common sense to me.
We are talking about doing without guards on trains on some local lines—perhaps on goods trains as well. There may be pilot schemes for that. If such a scheme worked, it would save a tremendous sum.
Bearing in mind unemployment, we have to remember that taxpayers' money is involved and that British Rail must run profitably, just as any private company must do.

Mr. Ogden: I am fascinated by the hon. Gentleman's use of the terms "we" and "they". Who does he mean by "we"? Earlier, the Secretary of State for Transport said that the management of British Rail was capable and dedicated. The Secretary of State and the hon. Member for Huddersfield, West (Mr. Dickens) were elected on a ticket of less intervention in management. Now the hon. Gentleman is saying "We have provided all this money; we have obtained all those redundancies; and we are organising this, and they are doing that." Will the hon. Gentleman explain the dichotomy between "we" and "they"?

Mr. Dickens: When I use the expression "we", I am talking about taxpayers—us and the people sitting in the Strangers Gallery. I say that we have provided all this money, because we have.

Mr. Ogden: And the negotiations?

Mr. Dickens: The negotiations are between the management and the trade unions. They are also contemplating combining certain driver grades to make better use of drivers. They are also negotiating about the requirement for two men in the cab—in other words, single manning. Trade unions and management are working together for greater productivity.
As a Government, we are continuing our commitment to BR by applying taxpayers' money to the job. In so doing I hope that we shall continue to give a good and gradually improving service to the public. At the same time, the three elements of reliability, punctuality and cleanliness must be the key words for BR.
The National Bus Company has been mentioned in the context of cutting uneconomical routes, and so on. As one who regularly motors on the M1 from Yorkshire to Westminster, I see many National Bus Company coaches half-empty—sometimes only a fraction fully occupied—travelling along the motorway. But there are many more areas for saving, including the procurement department which purchases the buses. If the coaches had an engine capable of a longer life, with greater periods


between services, and if the chassis design were better as regards access to the engine for the engineers working on it, we could save millions of pounds.
Two brothers in my constituency have come up with a particularly good design.

Mr. Ogden: Ah!

Mr. Dickens: I do not mind mentioning it. The Government are giving them modest support through a small business scheme. The design may not get off the ground, because these men lack a track record of running a successful and profitable company. However, they have the design and they have plenty of orders. They have one order from the National Bus Company and some orders from Scotland. The design is good.
I believe that the policy of the National Bus Company is to put a coach on the road for about two years to test the life of the engine and the chassis. I do not think that we can improve on the coach bodies, which are normally made by one of two specialised companies. But we ought to be looking at purchasing policies within the nationalised industries, particularly British Rail and the National Bus Company.
I am pleased that we have matched the progressive investment in BR. The Government have given BR a commitment. We have backed the workers of BR, and it seems that the workers are responding by seeking to improve productivity. If they maintain cleaner carriages and come up with the improvements that I have mentioned, the nation will be more than pleased with the BR service.

Mr. Eric Ogden: The hon. Member for Huddersfield, West (Mr. Dickens) made a lively speech. If he is to be a member of the Standing Committee, it will be a most interesting and, probably, an infuriating Committee for the Minister to attend. There was much in what the hon. Member had to say. He has no need to apologise for trumpeting the merits of one of the small businesses in his constituency. All hon. Members should do that from time to time. If the particular idea takes off, that would be excellent. I support some of the hon. Member's suggestions.
Not only should BR clean up the carriages, but perhaps the passengers should be more careful not to provide so much mess for British Rail.
I hope that the Secretary of State will at least note some of the comments made from the SDP Bench on this occasion.
The Bill is part of the inheritance that the Secretary of State for Transport received from his predecessor. How much of the Bill is the direct responsibility of the Under-Secretary of State is a matter for him. Some parts of the Bill may be a continuing inheritance for those Department of Transport officials, whom we cannot officially see but who from year to year serve successive Secretaries of State in the same way that they serve successive Governments.
As I am in an ecumenical mood, I commend the contribution made by my right hon. Friend—I appreciate that that is not technically correct—the Member for Barrow-in-Furness (Mr. Booth). Somewhere between the Back Benches and the Front Benches there must be more agreement on this Bill than there is on some other Bills,

though the Secretary of State did not introduce this Bill with the flair and energy with which he has introduced measures on previous occasions.
The Bill is a rather strange mixture of Treasury and Department of Transport control. It is an attempt to combine in one Bill the allied but diverse interests of rail, road and the two major ports. A few weeks ago the Leader of the House told us that this Session of Parliament will be comparatively easier than the previous Session. He said that there would not be the same intense pressure to get legislation through that there was in the previous Session. If that be true, why is it necessary to try to combine rail and road financial interests with the financial aid and support for the two major ports, although there may be some similarity between them?
The hon. Member for Faversham (Mr. Moate), the right hon. Member for Barrow-in-Furness mentioned and the House has not forgotten that only a few months ago Government financial aid for the port of London was made available by a Department of Transport Bill carried through mainly on the broad shoulders of the Under-Secretary of State. The financial support that was later made available for the Mersey Docks and Harbour Company was again a Department of Transport Bill presented and carried through by Transport Ministers.
I am concerned—as I believe all hon. Members should be—that Treasury control and influence is coming more and more into the operations of transport and ports. Having said that, I would be churlish if I did not welcome the provisions of the Bill, although they may be only crumbs. Although not presented in a way that I would wish to see, the possibility of finance is provided. The provisions have arrived in a mixed package of road, rail and ports when I would have preferred a clear separation of Treasury and Department of Transport influence and control, and the finances of the ports of London and Liverpool to be considered in a separate Department of Transport measure, which could be called "Ports (Financial Assistance) (No. 3) Bill". Such a Bill should include more than the ports of London and the Mersey, because other ports require assistance. However, the provisions show that the Government can—although very belatedly and perhaps in the wrong way—try to do something to aid some industries.
I ask some specific questions. I may not get answers from the Under-Secretary of State tonight, but they are questions that should be asked on Second Reading rather than waiting for Committee proceedings.
In his introduction the Secretary of State gave some reasons for the financial provisions, but he did not explain why, for example, the present financial limits of the British Railways Board of £600 million to £900 million are to be increased, in clause 1 to £1,100 million at the lower end of the scale and £1,300 million at the higher end. The lower limit has been increased by £500 million and the upper limit by only £400 million. This is not a broad band. The money needed at the end of the term, however long that term is estimated to be, would purchase less than that needed at the beginning. It would have been more sensible to have an increase on a broad band rather than a limited one.

The Under-Secretary of State for Transport (Mr. Kenneth Clarke): I may not have time to return to the matter when I reply to the debate. The apparent division is only a technical matter. The lower figure is that to which


the limits would be taken automatically by the Bill. The higher figure will require the approval of the House by an affirmative order. Therefore, the significance of the second and higher figure is that before it reaches that level the House has a further opportunity to review matters and to consider an increase in borrowing limits. The fact that there are two figures is a procedural device to oblige the Government to come back to Parliament if they wish to go above the lower ceiling. No timetable is envisaged. A limit can be raised by order of the House. Therefore, it is a technical point and there is no hidden significance in the way in which the bands have moved.

Mr. Ogden: I am grateful to the Under-Secretary of State for that explanation, as far as it goes. However, a technical disadvantage of £100 million cannot be allowed to go through without some comment.
I turn now to clause 2. The present financial limit of £3,000 million is to be increased to £6,000 million, with the possibility of an increase to £10,000 million by a later Order in Council. I claim that the Bill provides a possibility. The hon. Member for Faversham said that it is almost certain that that amount of money will be spent. If either of us is right, perhaps the Under-Secretary of State can provide more information, especially as to what proportion of increases will cover prudent estimates of inflation, what proportion will cover new Community regulations, what proportion will cover new British Rail ventures under old or new Community regulations or anticipated new directions from the Secretary of State for Transport, because they will be directly under his control.
Clause 3 is the Treasury guarantee. Technically, there is a Treasury Minister on the Front Bench although I would be surprised if he were to intervene to support the Treasury clause. Clause 3 begins with the word "If', a word seldom used in legislation. The clause reads:
If the British Railways Board becomes a member of the European Company for the Financing of Railroad Rolling Stock".
Are we correct to assume that the British Railways Board has every intention of becoming a member of the European Company for the Financing of Railroad Rolling Stock? If so, would not the words "should" or "when" have been more appropriate? Perhaps the Under-Secretary of State can tell us the extent of the proposed involvement.
I turn now to the second part of subsection (1) of clause 3, which says that
the Treasury may guarantee the discharge of the Board's liabilities".
Will the Under-Secretary of State tell us anything about the criteria on which he or the British Railways Board envisage guarantees being either sought or withheld? All hon. Members will welcome the intention of subsection (2) of clause 3, that Parliament will be informed by statements laid before each House from time to time about the terms, conditions and arrangements made under guarantee, even if the House will be informed only after those detailed financial arrangements have been made.
I object to the detailed wording of subsection (4) of clause 3. It says:
If any sums are issued in fulfilment of the guarantee, the Board shall make to the Treasury, at such times and in such manner as the Treasury may from time to time direct, payments of such amounts as the Treasury may so direct in or towards repayment of the sums so issued, and payments of interest at such rate as the Treasury may so direct".
The word "if' is less welcome than it was previously.
Many hon. Members will assume that that means a degree of intervention by the Treasury—not Transport Ministers—that has not occurred before. If so, this does not support what the Secretary of State said about the capability and dedication of the British Railways Board, because this degree of intervention in the day-to-day direction and control of the British Railways Board has not occurred previously. The Committee should therefore consider whether such control should be looser than presently envisaged.
We can argue in Committee about the sums required to be paid in or out of the Consolidated Fund. However, I should like to say something about the National Bus Company, which seems to be the Bill's poor relation. Financial support for the NBC may be provided by clause 4 to increase the borrowing limits from £200 million to £250 million
or such greater sum not exceeding £275 million as the Secretary of State may specify by order.
The Secretary of State almost overlooked the NBC in his speech. His intentions seem to be "We shall treat them mean and keep them keen. Therefore, we are reducing what they might otherwise expect". In addition, if there is to be an increase from £250 million to £275 million, this must be done by affirmative resolution.
Any Government Minister should be prudent. Like housekeeping, the running of any Government Department, public or private company or other organisation ought to be proper and prudent. However, the Government should consider in Committee whether it is necessary or desirable to increase the limit from £250 million to £275 million by affirmative order. In view of the experience of the Department of Transport during the last three of four years, the Committee should take the view "Let us increase the limit to £275 million" and leave it at that.
We should note the different ways in which this extra money is to be provided. The provisions of clauses 2 and 3, and the borrowing powers under clauses 1, 4 and 5 are subject to the control of Parliament. But clause 1 states:
as the Secretary of State may by order specify".
Clause 2 contains the phrase:
as may be specified by Order in Council".
Clause 3 refers to
Any sums required by the Treasury
but only provides for a report to Parliament. The provisions of clause 4 will come into force when the Bill is enacted, and perhaps by affirmative order by the Secretary of State. Clause 5 will be enacted by Parliament through the Bill. In other words, the Bill contains four different ways of providing sums of money. Is that necessary?

Mr. Dickens: Perhaps I can be helpful to the hon. Gentleman. The help in clause 3 includes that to 16 European railway systems. It is therefore common sense for that to be a Treasury decision. I suppose there are special reasons why the sums are provided in this way, and what I have said is only one example.

Mr. Ogden: The hon. Gentleman was trying to help, and I am grateful to him. However, I doubt whether any of this money will help any other railway transport system in Europe. I leave that to the Minister to sort out, but I doubt whether the money will help or support any European system, be it on this side of the lion Curtain or the other side.

Mr. Kenneth Clarke: The hon. Gentleman has again been led into a tangle by my hon. Friend's offer of help. He is right to say that there is no question of our providing support for the purchase of rolling stock by any other European railway. EUROFIMA is a Swiss-based company to which British Rail may wish to belong. It finances the purchase of rolling stock by its member railways, and it may enable British Rail to purchase rolling stock by the equivalent of hire purchase on favourable terms, which EUROFIMA can arrange. Any borrowing by British Rail, or any purchase of that kind, will require a Treasury guarantee from Britain. That is one of the rules of EUROFIMA. I hope that short explanation explains why procedurally it looks on the face of it as if the Bill is different from the ordinary method of increasing the borrowing limits of nationalised industries or, indeed, the public service obligation of the railways.

Mr. Ogden: I am grateful to the hon. and learned Gentleman. I suspect that the hon. Member for Huddersfield, West will be equally grateful that the Minister has clarified some of the differences. I doubt whether this will be the last time the question will arise, bearing in mind the complicated provisions in the Bill.
As the hon. Member for Faversham said, large sums of money are referred to. Clause 2 refers to sums that the Secretary of State "may"—only "may"—have to provide in compensation. Clause 3 refers to guarantees that the Secretary of State "may" have to honour should British Rail fail in any of its obligations. Clauses 1, 4 and 5 refer to sums of money that British Rail, the National Bus Company, the Port of London Authority and the Mersey Docks and Harbour Company "may" borrow—not receive—from the Government, although there is a doubtful possibility that they may be able to get grants or loans from the Secretary of State.
In fact, in hard terms the Bill does not commit Government expenditure of even a brass farthing. This is an enabling measure. I hope that the Minister will confirm that
The "ifs", "ands" and "buts" are explicit in relation to the Port of London Authority and the Mersey Docks and Harbour Company. My former hon. Friend, the Member for Liverpool, Scotland Exchange (Mr. Parry)—I hope that he is still my friend—has explained the situation in the ports of the Mersey. However, clause 5 begs certain questions. Of the £160 million to be available under the Ports (Financial Assistance) Act 1981, how much has already been committed? We have heard stories about £60 million for the Port of London and the covering of the £3 million overdraft for the port of the Mersey. How much has been committed to London and how much to Merseyside? What grants, loans and guarantees, if any, have been made? I hope that between now and nine o'clock the Minister will check the claim made by the Secretary of State that some of the money to be provided can be used for purposes other than severance and redundancy.
Section 1 of the Ports (Financial Assistance) Act 1981 states quite clearly that the money could be used

"(a) for measures taken by them to reduce the number of persons employed in, or in ports adjacent to, their respective ports, being measures taken with a view to restoring the profitability of their undertakings; and
(b) for the carrying on of their undertakings while such measures are being taken."

Many hon. Members will recall that when that legislation was before the House, the Opposition argued that the money ought to be made available for modernisation, development, maintenance, dredging, services and so on. We were told by the hon. and learned Gentleman and the former Secretary of State that the money would be used only for deficit funding, overdrafts and so on.
Before the Bill gets its Second Reading it should be made clear whether the money available can be used for severance and redundancies only, or for development, investment or practical daily operating facilities. If so, this measure is different in degree from any others.
Last year we warned Transport Ministers that financial assistance was too limited in the ports designated. Manchester, Bristol and the Hull ports have all experienced trouble because of the limited scope of that Act. We also warned that the funds provided for the two ports were not adequate.
How does the Minister forecast the division of the extra £200 million? I should like to make a proposal that will not cost one ha'penny of new Government money. A proposal has been mooted on Merseyside that would aid the ports in the area, the urban development corporation and the inner partnership area, and would do what the Secretary of State for the Environment says that he wants to do on Merseyside—help investment, support and employment.
The Government should say today—not tomorrow, or after the Crosby by-election or next week—that for all sorts of reasons concerning port development, employment and regional strategy, the ports of Merseyside would be their preferred ports for the development in the Celtic Sea and the Irish Sea.
There is much oil and gas in the Celtic Sea, north of the Morecambe Bay fields, into the Western Approaches, south from the Isle of Man, past the Irish coast and beyond the ports of the Severn. The natural centre for that development, in the view of every Merseyside Member, is the port of the Mersey. We have shipbuilding, ship repair facilities, chandlering, support services, an airport and enough land in the docks for a heliport. All of this is supported by insurance, banking, commercial services and expertise.
The Secretary of State knows more about the subject because of his previous role as Secretary of State for Energy and he will realise that the exploitation of oil and gas could be better controlled and organised from Merseyside than from any other part of the country.
The Government would not have to put in a ha'penny. They need only say that from their point of view the preferred ports for that development are the ports of the Mersey. That would create incentives and hope that would be worth 6,000 jobs on Merseyside over the next five years—and all without a brass farthing from the Government. Merseyside Members of all parties, the development corporation, the chamber of commerce and, I believe, the Secretary of State for the Environment are all asking for that.
The Secretary of State for Transport ought to be able to make such an announcement tonight. We have a right to ask for it. If it is not made, we shall be entitled to conclude that a decision to concentrate development elsewhere is being held back until after the Crosby by-election.
I have taken more time than usual and I hope that the House will forgive me. This is a complicated Bill, which


will have a lively Committee stage. We may not be able to change the policies, but some aspects can be improved. The Bill shows that even if Ministers change Departments, monetarism, the. Treasury and the Prime Minister still rule. The only real hope for the railways, road transport and the ports of Merseyside, London and elsewhere is a change of Government.

Mr. James Hill: This is the third transport Bill to be presented to the House in the past two years. I served on the Committees that considered the previous measures. The Bill has only five clauses, for which we are grateful, four being technical clauses. However, clause 5, which deals with financial assistance to the PLA and the Mersey Docks and Harbour Company, will have a ripple effect on the atmosphere of port life. Such ripples inevitably spread from any concession provided for Merseyside and London.
I congratulate British Rail on its excellent service from Waterloo to Southampton and Bournemouth. The line has been electrified and coaches have been modernised. We have an efficient and reliable service, and we were even able to overlook the fact that my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) once found some Russian matches in a restaurant car.
I congratulate the chairman and staff of British Railways for maintaining an excellent service through the many distressing disputes of the past few years. The service to my constituency and beyond is efficient and punctual and has all the facilities that we desire in a railway service. As a pro-European, I can confidently compare it with the service in any EEC country. I say to some of my hon. Friends that sometimes congratulations get a better response from the work force of a nationalised industry than constant harping that pays no regard to whether the industry is efficient.
As the representative of a port, I have been caused more heartache by clause 5 than by any other part of the Bill. Anyone who reads between the lines knows that the enormous sums that we are considering—an increase from £160 million to £360 million—are earmarked for the special severance scheme for registered dock workers. Our ports have to modernise in step with Continental ports. Containerisation has arrived, and there has been overmanning in the past because the national dock labour scheme made no allowance for modernisation or evolution in port work.
Whether one loves or hates stevedores, one must accept that they are hanging on for severance pay. The Jones-Aldington agreement was drawn up when stevedores felt that they were being put upon and were at the bottom of the wages structure ladder. They grasped the agreement, as did the port employers, because it seemed that it would bring harmony to port operations.
About 1,000 volunteers in Liverpool and London have been attracted by the severance pay, which goes up to a maximum of £16.000. More than 300 workers in the port of Southampton have accepted severance pay in the past few weeks, but they had been waiting for the increase that put them in line with the terms already offered in London and Liverpool. On grounds of principle, all severance pay should be at the same level. We should all agree that when my right hon. Friend the Secretary of State specifies the rates, they should be uniform.
The port of Southampton has had one of its worst years in living memory. We witnessed the distressing spectacle of the port, which handles international traffic, operating only during the hours of daylight and for only five days a week. There was the inevitable log jam. Container ships that came in had no time to turn round, and therefore no time to dock cargoes. They had to take them to other destinations, trans-ship on the Continent and send them back by the ferry services. Large ships were no longer calling and Southampton was losing traffic worth millions of pounds. That occurred because of a difference of opinion between the Transport and General Workers Union, representing the stevedores, and the British Transport Docks Board over fall-back pay. That is a colloquialism for the lowest amount of money a man can get without working in the port while still reporting for work each day. The fall-back pay was fixed by the board at £94 a week, and the stevedores felt that it should be £105 a week. The board refused the increase and the refusal led to the long period of daylight-only working from Monday to Friday. Millions of pounds worth of traffic was lost and there was a consequent general rundown.
Although in most ports there are a number of unions, in Southampton there are as many as six. What the stevedores managed to get, the other unions also wanted. There was a ripple effect. The crane drivers, who belong to the National Union of Railwaymen, the boilermakers, who although there are only a few of them, have as much effect as though there were several hundred, the cargo checkers and other workers all wanted the same as the stevedores. It is now nearly December and the port of Southampton has been operating at a great loss for some eight months.
The Bill will probably give more money for the special severance scheme, but the very basis of the scheme should be examined. My right hon. Friend said that no money would be available for revenue lost after the end of 1982.
The Bill deals with London and Liverpool. But are the other 19 ports operated by the British Transport Docks Board subject to the same conditions? The disputes at Southampton have meant that the chairman of the British Transport Docks Board, Sir Humphrey Browne, will find it increasingly difficult to balance the books as Southampton is perhaps the largest port and the finest jewel in the crown of the British Transport Docks Board. To achieve the financial viability of ports in general, as well as those of London and Liverpool, the Government will have to look at the national dock labour scheme again. As modernisation creeps into the ports the same number of men will have less to do, but the employers will still have to employ and pay them the fall back pay.
When it comes to the crunch, we shall probably find that the dock labour force is either too big, because the men are not taking advantage of the severance scheme in the belief that they may receive more money, or that so many of them have taken advantage of the scheme that the port has to employ temporary dockers. That latter outcome will create a similar state of affairs as soon as trade falls off again. I am sure that my right hon. Friend the Secretary of State will be looking again at the national dock labour scheme in the not too distant future.
I am always extremely cautious about reading aloud in Parliament the letters of constituents, because often their views tend to be biased. However, recently I received a letter from a nearby constituency which seemed to come straight from the heart. The constituent writes:


I had written to my MP on this subject during the previous strike and suggested to him that as the local Member of Parliament he should intervene before too much damage was done to the port. I also said that it was now quite evident that with this strike and that of the Civil Servants"—
he is covering a lot of ground with that statement—
who by holding up exports are ruining the country, it was the unions who are causing much of the unemployment.
I do not think that that can be said of a docks dispute. The problem is not the unions; it is the guidelines and rules within which they operate.
The letter goes on:
It is absolutely ludicrous that these dockers are paid £94 a week for doing nothing. Are they attempting to make Southampton a Liverpool where they go every week and draw this amount?
By not reviewing the national dock labour scheme the Government are creating not only targets for those who do not understand the problems but an impossible industry for anyone to manage. We come very close to that state of affairs when a port such as Southampton makes the front page of Lloyd's List, as it did on 5 May 1981. The headline was "Dockers' clampdown hurts Southampton." Every shipowner throughout the world will have read that and asked himself "What is the good? How can we go there? If we do, shall we get in? If we get into the port, shall we get out?"
Another headline that I saw said:
Southampton Port: A world-wide joke?
It is not a joke. It is a very efficient, modern port. Millions of pounds have been spent on the container port. It is a great asset to the South of England and to the United Kingdom as an exporting country. We never read that Rotterdam is a world-wide joke. We do not want to read that industrial relations in London, Liverpool or Southampton are a world-wide joke.
Once and for all, we have to get harmony in the ports, and this is a good time to start. My right hon. Friend is in a wonderful position. He has increased the severance pay. He is now introducing a Bill which makes adequate provision for further severance pay. For the first time, he can deal honestly with overmanning in the ports. Having done that, he must bring the national docks labour scheme up to 1981 standards. He must do that, and do it quickly. A great port such as Southampton cannot wait. In many cases it has to move ahead of the Government, because it must attract trade.
Some of the letters which I receive from my right hon. Friend the Secretary of State for Employment, say in so many words, "We cannot do anything about it. We cannot look at the issue at the moment. We would rather have a rundown of overmanning than have a complete rethink of the national dock labour scheme". I should have thought that most shipowners, and certainly most employers who employ dock labour would like to go back to the old system, when they took on and cherished their own workers, instead of the present allocation system. They took on the people that they needed. They were not forced into the terrible business of taking on eight men to do six men's work.
The port of Southampton is still involved in a dispute, which will go on. There is no question about that. I have a letter from the British Transport Docks Board in Southampton, signed by the port director. He says:
Since troubles began in February the following services have left the port or are seriously at risk".

He then gives a long list, with which I shall not weary the House. There is no doubt that if our ports are to be viable and if we are to carry out the intentions of the last Transport Act to privatise 49 per cent. of the British Transport Docks Board's shares, we must have profits.
My hon. and learned Friend the Under-Secretary, who served on the Committee with me, knows full well that his right hon. Friend intended to float the shares this autumn. There is no way now, in my opinion, of keeping to that timetable. If my right hon. Friend and my hon. and learned Friend have to look into the conditions in the port, the sooner they do so the better. The profit figures will then show again, and it will be possible to realise their dream—and my dream—of privatising the British Transport Docks Board.

Mr. Donald Anderson: At one level, this small Bill is simply a technical Bill, a formal uprating of the borrowing powers of certain public transport undertakings. Yet every previous speaker has quite properly used it as an opportunity to make general remarks on investment in public transport and in the economy as a whole.
The Government's mormal case against public sector investment is couched in these terms: that increased public sector investment leads to higher public borrowing, which leads to inflation and, by a "crowding-out" argument, thus deprives private investors of the resources that they need to generate economic recovery. Clearly, in times of under-used capacity, that is hardly a relevant argument. I believe that the Government will be forced more and more to respond to pressures from all sides to see public investment in a new light, because of the clear relation between public investment and job creation.
We know that the Manpower Services Commission now estimates that it costs the Government £4,380 per annum for every unemployed person in terms of benefits paid and taxes forgone. Government borrowing is therefore pushed up, and the Government are on a steep learning curve in respect of the employment effects of their own cutbacks in public expenditure.
We can test this proposition in respect of the railway industry, by looking at the effects of what would happen if the Government were to respond to the major possible investments in railways over the next five years—in electrification, investment in the London and South-East commuter services that British Rail has called for, the rail-air link to Gatwick airport, and preliminary investment in the British Rail-SNCF single-bore Channel tunnel link. All those projects are viable, all of them are at the starting block, and all of them could give a considerable boost to our domestic economy. Yet, because of the present rules, there is a barrier to their proceeding.
If the Government were to invest over the five-year period in those major transport projects, there would be the following effects. They would generate almost 30,000 jobs by 1985, assuming that the investment was in United Kingdom products. One feature of all these investments is a low import content. The effect on the annual rate of inflation would be less than 0·2 per cent. per annum. The saving to the public purse in terms of the reduction in unemployment, social security benefits and taxes lost would be over £100 million per annum. That is half the


cost of the investment itself, and, of course, part of that investment would come, not from the public purse, but from private funds.
Faced with these possibilities for public investment and with the pressures from all sides, including the CBI, for some moderate increase in public investment, the Government have adopted a wholly negative attitude. I responded to the Government's announced increase in the PSO, which is of course welcome, but it is irrelevant to the longer-term case for investment.
The expectations that people who work in the industry and people who are interested in the industry held about 12 months ago of a brighter future for the rail industry have now been considerably dashed. As the result of the Government's responses and lack of decision over the past six to 12 months, there has been quite a sea change in morale in the railway industry. That is the backcloth for the productivity talks, yet the Government nevertheless expect the unions to make a full response to the ACAS agreements at a time when investment is being turned off. The Government refuse to accept this trade-off between investment, morale and the subsequent response of the work force.
We know that the infrastructure of the railway industry is in considerable decay. The signalling systems are collapsing. I understand that the Marylebone to Aylesbury line is in desperate straits and that the workshop situation is also desperate. We understand from the British Railways Board that, as a result of financial constraints, there will be no new investment in 1982. Indeed, the board will be hard pressed to finance the continued investment on programmes already begun. That is the picture of decay that exists in this major industry.
The Government have dragged their feet on all the major commitments that they made during the past year. I shall go through those commitments speedily, because my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) went through them in detail. The Government changed the rules on rail electrification, following the report of the joint working party and the expectations that were aroused as a result of the joint conclusions. The Government's refusal to sanction the Hitchin line electrification has meant that an experienced work force and 200 men working for Balfour Beatty have now been served with initial redundancy notices. That team will be very difficult to replace. What economic sense is there, when the Government repeat time and again that they have accepted the 10-year programme in principle—whatever that principle may be—in refusing to sanction in the interim period, a plan for the carrying over of that work force? They are prepared to countenance the disbanding of that group, knowing, as Balfour Beatty and the British Railways Board say, that it will take not less than 12 months to construct a team with that expertise, and all for a relatively small investment.
British Rail says that the rationale behind the Hitchin line investment was that it was the cheapest option for keeping the experienced team in being so that it could continue from Bedford-St. Pancras to electrification in East Anglia. Investment in electrification would benefit British industry almost exclusively. There would be few imports. As it would mostly benefit existing manufacturers, it would assist areas of high unemployment. I have done some research and know in "South Walean" terms that South Wales Switchgear in Blackwood, the two major steelworks at Llanwern and Port Talbot, as well as several

other firms in this area of high unemployment would probably benefit directly from an electrification programme. In addition, the programme would act as a showcase for exports. The Government have been tardy and have allowed the team to be disbanded. They have undermined a substantial part of the progress that could have been made on electrification.
I have mentioned the Anglian electrification programme. So far, the Government have maintained that it should be distinct from main line investment. Many press reports have mentioned that the Government's response to British Rail is that it should put up schemes. British Rail says that it has put up a scheme for electrification in East Anglia. Indeed, the scheme was proposed in November 1980, but the Department's officials bombarded British Rail with a plethora of questions. They ran out of questions about four months ago and therefore they cannot use that as a delaying device.
For the past four months there has been silence. A potentially major step forward in the electrification programme is apparently thought of as distinct from the major programme, yet the Government seem to be doing nothing about it. They have had the papers for more than a year. One wonders whether the Government will seek to change the rules yet again and impose a new profitability exercise on the Anglian line. On normal commercial criteria, the line cannot be profitable. It was never meant to be "profitable". Will the Government seek to change the rules as they did in relation to the main electrification exercise?
Targets are set. We have heard again today that the Government have set a target of break-even by 1985 for the inter-city lines. However, in this Government-inspired recession the effects are felt first by freight services—they have been felt somewhat earlier than expected in 1979–80—and then by the passenger services. Therefore, the Government are by their economic policies destroying the possibility of attaining the target that they set.
Despite all the expectations that have been aroused, even the Channel tunnel—if we are to believe the transport correspondent who wrote in Saturday's edition of The Times—is in question. Apparently, only two options are now available. The jumbo British Steel project is no longer possible and the correspondent said:
Hopes of a firm decision on the Channel tunnel in the life of this parliament are beginning to fade after what promoters regard as feet-dragging on the part of the Government 
Is this yet another missed opportunity? I shall be delighted if the Minister can contradict me. However, the timetable is moving against the Government. There will have to be a commitment by next spring if legislation is to be prepared in time for the Gracious Speech. This Parliament will be over before the Government will be able to give a firm commitment. If the Government can contradict that article, I and many others will be delighted.
I turn to the new uncertainty about the Government's commitment to the network. The Secretary of State's predecessor, now Secretary of State for Social Services, gave a firm commitment to the existing network. He implied that there would be only minor reductions and no substantial reductions. Although the Secretary of State has used the word "substantial", most of us suspect that his interpretation of that word is more expansive than that of his predecessor. Given the pressures on the financing of


British Rail "substantial" is likely to mean that the network—or substantial parts of it—will be called into question.
The rail union and the other two unions in the tripartite alliance are affected by the pledge that the former Secretary of State for Employment, now Secretary of State for Northern Ireland, gave of an open door and of access to him. That pledge has been repudiated by the newly appointed Secretary of State for Employment and will no doubt be reflected in the rail unions' response to matters that are asked of them.
I turn to London and to the south-east region. The Minister gave a negative response to the report of the Monopolies and Mergers Commission. The report's conclusions might not have been quite what the Government expected. In their response, the Government have removed the room for manoeuvre that British Rail had. They say that there will be no more money and that there will be no increase in fares in real terms. Yet they say that there will be no reduction in the quality of service. Presumably, that will be interpreted to mean that there should be no closure of individual stations on the line. How will the problem then be met? We are told that it will be met by productivity. The report of the Monopolies and Mergers Commission made one point clear. It said:
The answer could not be found in productivity alone … it has to be recognised that achieving improved productivity depends to some extent on investment.
Of course, better housekeeping may give rise to some savings. However, major savings will come from increased investment, in signalling—the Minister mentioned the investment in London Bridge—in automatic level crossings and from technological changes at ticket offices and so on. All that requires an undertaking to invest that the Government have not given.
The Government can hardly request increased productivity at a time of economic recession. When the rail industry lost a large part of its work force in the decade from 1960 to 1970 about ¼ million jobs were lost. However, there was no Luddite reaction, because there was a boom and the men were absorbed elsewhere in the economy. The Government have asked now for increased productivity at a time of recession and they can hardly expect the same response.
The picture of an inefficient work force being reduced and of the proceeds being used for investment hardly accords with what we know about the operations of the south-east region and the problems of recruitment in many parts of that area.
Having looked over those areas of investment—the electrification programme in general, the Anglian electrification programme in particular, the Channel tunnel, and so on—where but a year ago there appeared to be a real future for the industry, it is now clear that the picture is very different. The Government are taking a harder line on investment in the industry and a negative response to the proposals, which must deeply affect the morale and the future of the railway industry.

Mr. Peter Temple-Morris: I wish to speak mainly about British Rail, and therefore it is appropriate that I follow the hon. Member for Swansea, East (Mr. Anderson), who made a valuable contribution

to the debate. He made some good points and it will not surprise him, therefore, when I say that I agree with much of what he said. In our transport debates, not only in this Parliament but in the previous Parliament when roles were reversed, there has always been a reasonably constructive approach and a measure of agreement has been reached. There has been a continuity of policy on British Rail and in other areas. Most of the problems that we now face were faced by the Secretary of State's predecessor and his predecessor in the Labour Government.
As I am speaking about the subject in a bipartisan way, this is an appropriate moment for me to welcome the hon. Member for Liverpool, West Derby (Mr. Ogden) in his new incarnation. It would be remiss of Conservative Members not to congratulate him, not only upon his new incarnation but on his somewhat rapid elevation to the "Front Bench". I trust that I am referring to the transport spokesman of the new party. If it increases its numbers to the extent that it has been doing recently, it will rapidly run out of portfolios. It is just as well, therefore, that the hon. Gentleman made his decision when he did.

Mr. Ogden: I should be churlish if I did not thank the hon. Gentleman. The reason for my move to the "Front Bench", from my customary place for the past 17 years square in the middle of the Labour Party ranks with my back against the wall, is simply that in my old party it was safer to have my back against the wall. In this party it is a little different. There is no significance in the fact that I am speaking from this Bench. My comments in the debate did not commit my party. They were entirely my personal comments.

Mr. Temple-Morris: Whatever party the hon. Gentleman speaks for, or whatever part of the House he speaks from, his speeches have always been typified by a moderation that we hope will continue.
The hon. Member for Swansea, East spoke about public sector investment. I should like to refer to a few of his points and then reiterate them in my remarks in my own way. He related public sector investment to the Government's overall economic thinking. But I hope that he will have the grace to agree with me that there is no doubt that the public purse is not a bottomless pit. Equally, there is no doubt that if any nationalised industry or any other industry is totally secure in the knowledge that it will always receive public support to the extent that it needs and for the deficit that it creates, industry will not perform with the efficiency that we expect. We must try to create a position in which it can perform efficiently. We must try to obtain the maximum from the nationalised industries. Their performance in the past has proved that that is possible. I know that there are differences of opinion about that.
Our discussion today concerns productivity and public subsidy, and the balance between the two. I appreciate that Opposition Members look more towards investment and that we tend to look more at the productivity angle, but a balance must be achieved and I hope that an accommodation can be reached between both sides of the House. Anyone who knows anything about other countries—where not only are there planned economies, but no discipline whatever in the public sector, not to mention the productivity and living conditions of the work force—knows what that can create.
In terms of the public sector here, now or in the future, I should be the last to put my remarks in an absolute form.


I realise that there is a case for public sector investment where there is high unemployment. It is not for me to go beyond the parameters of the debate into wider economic arguments, but it is no secret to any hon. Member that these matters are being ardently discussed in various places at present.
The hon. Member for Swansea, East made one good point that I take on board—I hope that my hon. Friend the Under-Secretary of State will take it on board—concerning the balance between public investment and productivity. In order to get it right, we must not destroy the morale of the British Rail work force. That worthwhile point should be borne in mind.
One of the Government's errors—it goes far beyond transport matters—is that far too often the hearts and minds of men tend to be forgotten in the macro-economics argument. I have said that before and on one occasion I voted against the Government on such a matter. I know that my hon. Friend the Under-Secretary of State will bear that morale point in mind and that he will do his best for British Rail in the difficult economic circumstances.
I come now to British Rail in general. I am convinced, and I know that many of my hon. Friends are convinced, that it has a vital future in the energy sense, in the environmental sense and in the European connection. I am concerned that the timetable for the Channel tunnel is turning against the Government. The project, has been subject to considerable delay, not just by this Government, but equally there is no credit to be taken by the Opposition. If we were not to follow that path now, I should be distressed.
I know that unity on the matter does not prevail among Conservative Members any more than it does among Opposition Members. My hon. Friend the Member for Faversham (Mr. Moate) and I have disagreed in Committees considering Transport Bills before now. As a convinced European as well as being a supporter of British Rail, I am in favour of the project and believe that we should encourage it. I hope that the Government will be bold. The British Rail plan is a basic plan which is tailored to basic needs and can be privately financed. I hope that our approach will be even bolder than the basic one-bore tunnel plan. I know that there is scope for an increase there and that that will not be the end of the story even if it is accepted. When my hon. and learned Friend the Under-Secretary of State replies, I hope that he will deal with that matter. I appreciate that consultations are taking place. However, my right hon. Friend should deal with the suggestion that the timetable is moving alarmingly against Her Majesty's Government. It has been put to him that the issue will continue through this Parliament and into the next one. That has been said by the hon. Member for Swansea, East and it is a view that I share.
There must always be a balance between subsidies and productivity. It seems that a greater reality is striking home. That applies to management and especially to the work force. I appreciate that there is a fear of unemployment. That must be acknowledged by anyone who has any human feeling. However, those who are in work must realise that efficiency is paramount if new jobs are to be created. They must recognise that we must be sufficiently competitive as a country if we are not to sink. That is the nature of the political and economic argument.
There is now a better climate. We have avoided confrontation in British Rail of the sort that we have

witnessed in other industries. Fortunately, in the past few years there has not been too much major confrontation. By and large, British Rail's record is extremely good.
I pay tribute to Sir Peter Parker. He is an outstanding chairman. The longer that he sees fit to remain in that capacity the better. He can communicate with and lead the work force as well as management. It is a work force that has one of the best traditions in Britain. It is in every respect a noble work force. I have said that before in transport debates and I am glad to say it again.
As I have said, the work force must recognise realities. It has been extremely awkward in its time when progress has been sought. I am delighted that no strike took place this year. Reason prevailed on both sides. The test has still to come. That will lie in the final productivity agreement that is obtained from the unions. Confrontation was unnecessary and the climate prevailed in which some form of agreement was possible.
The sooner that we get a confederation of railway unions the better. We have been plagued in our dealings with British Rail generally and British Rail has been put into almost impossible positions because there have been three unions with which the Government and BR have had to deal. There is talk from the union side that a conferderation is about to materialise. That will be part of the better climate that I think is prevailing. I would be the last to take extreme action from the employers' side that might create a strike and make it even more difficult to bring the unions together. Bearing in mind the leadership that Sir Peter Parker can give British Rail, the future of the industry, with the trend of developments and environmental and energy considerations running in its favour, will be extremely good. That future will be enhanced if the unions come together.
It is necessary to show confidence in British Rail. There is within the organisation the sort of leadership that can avoid the lamentable happenings at British Leyland in recent times. There was near confrontation. That involved one of the major aspects of the company's activities. To slip back into a mini-confrontation of increasingly disastrous proportions over tea breaks strikes me as being sad. That is the sort of behaviour that the management of British Rail will avoid.
There has been considerable progress on productivity within British Rail. It was agreed that a target should be set following the 1980 pay settlement and that became the shedding of 38,300 posts by 1985. To reach such a settlement and agreement is a considerable achievement. By the end of 1981 British Rail is expected to have shed 14,250 posts. Parcels and other loss-making services will contribute very much to that result, but that performance must have a bearing when we talk about the morale of the unions and their reaction to the formidable target of having about 38,000 fewer posts by 1985.
We do not know the outcome of this year's wage settlement, but it is clear that progress is being made in certain areas. For example, we have open terminals. The fact that ticket barriers are not being manned is a relevant consideration. There are two pilot schemes, one in Scotland and one in the West Country. There is flexible working which has a bearing on the reduction of overtime claims.
We no longer have guards on the trains on the St. Pancras-Bedford line. That general issue has been with us for years. The objective has finally been achieved on a line


that has been electrified. That shows that when faith is shown in the system there will be progress in other directions. I hope that we can all agree about that.
Guards are being taken off freight trains and there are proposals for pilot schemes. Last but not least, an extension of single manning is being discussed. British Rail wants a relaxation of the rules that provide for two men to be in the cab. It is forecast that an agreement will be reached before long. That will be critical. If agreement is reached on that issue, many of the other matters will fall into place fairly speedily.
In my view, nothing would bring about greater confidence within the work force of British Rail than progress on electrification. We have been bottom of the international electrification league among developed countries for many years and our position is becoming worse and worse. My hon. Friend the Member for Faversham talked about the disbanding of the electrification team, which we read about in the newspapers last weekend. That development must worry everybody. It will have a devastating effect on morale. My right hon. Friend the Secretary of State intervened to say that the team was being disbanded because the Government were patiently awaiting the production of schemes. He suggested that schemes were not being presented.
It is a matter of concern when we hear that when any scheme or suggestion is submitted further questions are raised and there is further delay. Any suggestions for electrification in the initial stages of a 10-year rolling programme must be regarded as forming part of a constructive attitude. When the Government consider public sector investment, they must surely realise that there are few better candidates for such investment than the electrification of British Rail. The British Rail work force and others will lose confidence in the 10-year rolling programme if developments such as the disbanding of the electrification team recur.
The 10-year rolling programme is grand in its conception. It sounds marvellous. To be fair to it, it was warmly welcomed by Sir Peter Parker, but it is full of "ifs" and "buts". It is up to the Government and British Rail to establish confidence in the rolling programme which would create the willingness of the work force to work out productivity deals. It is pivotal and a major factor in achieving the confidence of the work force and the consequent productivity.
I have spoken for long enough on this important matter. I am grateful to the House and to you, Mr. Deputy Speaker, for listening to me.

Mr. George Foulkes: It is a great pleasure to follow such a refreshingly positive speech about British Rail from the Government Benches. I did not disagree with one word that was said by the hon. Member for Leominster (Mr. Temple-Morris). Like him, I am an enthusiastic and unashamed supporter of our railway system. I say that as a willing taxpayer contributing towards it and as a regular user of British Rail network.
An extensive and efficient railway network is essential for the industrial development that we desperately need. It is essential for the development of our tourism and of

leisure. That is so self-evident that I am depressed when I hear some of the negative remarks that are made about the railways.
The railway system is environmentally preferable to the haulage of goods and transport of individuals by road, whether by lorries or motor cars. With regard to energy conservation, it is extremely beneficial compared with the alternative systems.
I shuddered to read in The Times today that it was suggested that a business man should be appointed to look at British Rail. It would be an examination similar to the one that was undertaken when the mad Dr. Beeching carried out that dreadful chopping of the railways some years ago. I hope that the Minister will categorically deny the report and tell the House that there is no intention of bringing in anyone like that to deal with British Rail. As the hon. Member for Leominster said, British Rail has an excellent management and a chairman.
The concept of the term "loss" as applied to British Rail is unfortunate. As has been said by a number of hon. Members, we are talking not so much about a loss as about a commitment that successive Governments have sought from British Rail through the public service obligation. It is the public service obligation that we put on British Rail that costs the taxpayers money. It provides us with the services that we request, and we must pay for them.
Many of the current problems of British Rail, as is said in the annual report, are a mirror image of the economy. It is suffering from the recession and the downturn in the transport of freight and of passengers. That is because of the recession in industry and of individuals' inability to afford to travel. The best thing that the Government could do for British Rail, as for many sectors of our economy, would be to make a big improvement in the economy.
We have heard some positive remarks about the intercity services. I echo those remarks. The inter-city services are improving. I have experience of that. However, the British Rail network is effectively crumbling at the edges. Outwith the inter-city network, in the feeder services to the cities and the peripheral services, there is a serious reduction in services on Sundays and in the evenings and in timetabling. Those reductions are creeping insidiously into the good services provided by British Rail. That reduces the attractiveness of the services and, together with the increased prices, results in a downward spiral of the railway system. The crumbling at the edges is not the wish of the British Rail management, still less of the British Rail unions. The crumbling at the edges is the result of a lack of investment and commitment by the Government.
The hon. Member for Leominster efficiently and eloquently gave a catalogue of the improvements in productivity that have been brought about by British Rail management with the co-operation of the unions. He paid a gracious tribute to the unions for what they have done. However, he then talked about the need for electrification. I agreed with everything that he said, but he failed to link the two though they are linked.
There was a bargain between the Government and British Rail. A bargain has two sides. The side of the bargain to which British Rail and the unions were committed was to improve productivity. The other side of the bargain to which the Government were committed was to increase investment. British Rail and the unions have kept their side of the bargain, but the Government have not. They have not given a commitment to investment in


the most important matter—electrification. Such a commitment would improve the morale of the unions and everyone else in the railway system, including the management. Therefore, the Government have let down British Rail management and the unions on that side of the bargain.
At the Labour Party conference, which I attended, we all talked about the importance to our economy of increased capital investment. Every time we spoke about it, the first capital investment programme that came to every speaker's lips was electrification of the railways. I had an opportunity to watch on television the Social Democratic Party road show. When the members of that party talked about public investment, the first thing that came to their lips was electrification of the railways. The same thing happened at the Liberal Party and Conservative Party conferences.
The consensus was that electrification was desirable. It would boost the economy, improve the service and help our energy needs by shifting from oil consumption to electicity. However, we have not seen the action. We have been long on talk and short on action. I hope that the Minister, because of the bargain struck by the Government with the British Rail management and the unions and because of the talk by all the parties about the need for electrification, will give us a little hope in his reply.
I turn now to the electrification of the Ayrshire lines. That is different from main line electrification because the Strathclyde passenger transport executive is principally involved. British Rail has said that it is willing to go ahead with its commitment and its part of the expenditure. The Secretary of State for Scotland has given some reasonably helpful signs of his support. The ball is now in the court of the Strathclyde regional council.
If the electrification of those lines does not go ahead, Strathclyde regional council will have to consider seriously the alternatives to electrification. In my view, there are three options. The first is to do nothing to the Ayrshire lines. Eventually, as sure as night follows day, that rolling stock will fall apart. It is in a grotty state at the moment. Any continuation will result in its falling apart.
Secondly, the present diesel multiple units could be upgraded. That would still involve the regional council in substantial expenditure. It would not improve the service in the way that electrification would. It would be a short-term solution only and would put off the ultimate decision when electrification or permanent upgrading would have to take place.
The third possibility is for Strathclyde, which is worried about the revenue consequences, to hand back responsibility for those lines to British Rail. That, however, would undermine the whole concept of the passenger transport executive, although there are some arguments in favour of it.
As several of my hon. Friends have said, electrification brings a number of positive advantages. Electrification in Ayrshire would provide construction jobs on the lines in an area greatly in need of new jobs. It would also provide jobs in the building or refurbishment of rolling stock in Glasgow. It would use steel from the British Steel Corporation's plants in Scotland. It would speed up and improve the service. More people would use an electrified service in Ayrshire than use the present deteriorating service.
If my colleagues in Strathclyde region are worried about section 20 payments, which I appreciate are

escalating enormously and represent a great burden for the ratepayer, I suggest that, if they do nothing to the railways, those payments will be enormously increased. There is no stopping that, given the way that things are going at present. But if they electrify the railway and improve the services so that more people use the line, the contributions are likely to be reduced. In the long term, it is a sensible investment. Therefore, I hope that Strathclyde will decide in favour of electrification.
Under pressure from Ayrshire Members of Parliament, the Secretary of State has now offered a grant of 75 per cent. towards the capital cost of the electric multiple units. That will go a long way to help in the repayment of loan charges. In his letter the right hon. Gentleman also said that he would be happy to
submit the fixed elements of the scheme … for assistance to the European Regional Development Fund.
Can the Under-Secretary of State say whether, in addition, EUROFIMA might have a role to play in financing the rolling stock on the Ayr line if British Rail were to join that body?
I see great possibilities for electrification in that area. It is somewhat different from the main line electrification, but it involves the same kind of benefit to the area and to the service. I therefore hope that my colleagues in Strathclyde region will take an early decision in favour of the project.
My last point on main line electrification relates to the Kilmarnock line, which is not included in British Rail's proposals for main line electrification. I hope that representations will be made by my right hon. and hon. Friends on the Front Bench and by the Government, as local Members of Parliament have already made representations, to persuade British Rail that the Kilmarnock line should be included. The line is an important means of access to Prestwick airport from the south through the Barassie-Kilmarnock link. It is an important alternative to the main line south from Glasgow in times of difficulty. It is also important in terms of access from Kilmarnock to Glasgow and from the Cumnock and Doon Valley district, which I represent. That area at present has no railway station, but if Auchinleck station were reopened—a matter on which I and my colleagues are currently pressing the regional council—60,000 people from that area would have access to a railway station. If British Rail provided an improved service on that line, there would be a great increase in railway use because of the rise in fuel costs and the difficulty of road access. I believe that there would be a resurgence in use of the Kilmarnock line, which would benefit not only the Cumnock and Doon Valley area but Kilmarnock itself. My hon. Friend the Member for Kilmarnock (Mr. McKelvey) is unable to be here, but he has asked me to express his support for such a development. There is therefore great potential in electrification if the Government will grasp the opportunity.
I turn briefly to two points relating to the morale of workers within the railway industry as a whole—a matter which has been mentioned by a number of hon. Members today. Morale among workers in British Rail subsidiaries is very low. The morale of those working in Sealink and British Transport Hotels is extremely low, because the Government are giving them no encouragement whatever. Indeed, they are doing the reverse. If the staff make a success of anything, it is sold off. There is no encouragement for the workers to make a success of those


enterprises. There is an incentive to do the opposite. If they wish to retain management of their undertakings, it is beneficial not to make a profit, because, as soon as they make a profit, the beady, greedy eyes of the Minister find their way to it and hive it off to the Conservative Party's friends in the private sector.
I realise that my next point is not the direct responsibility of Transport Ministers, but I am sure that the Under-Secretary of State takes a close interest in it, as, no doubt, does the hon. Member for Galloway (Mr. Lang) who I see on the Government Front Bench today. I refer to the report of the Monopolies and Mergers Commission on Sealink. I understood that the report was due earlier this month, but we have so far heard nothing of it. It is important for the morale of those working in Sealink that we should know as soon as possible what the position is. I hope, of course, that the bid by European Ferries will be ruled out by the Monopolies and Mergers Commission and by the Government. If it is seriously interested in competition, a Sealink service on the Stranraer-Larne line in competition with the Cairnryan service operated by European Ferries seems manifestly in the public interest, particularly now that the link between Liverpool and Belfast has ceased and shows no immediate prospect of resuming operations. I therefore hope that there will be some action on that matter.
My last point relates to British Transport Hotels, and in particular to the Turnberry hotel. The decision to sell off that hotel is one of the most despicable decisions that the Government have taken. There has been a great deal of public investment in it. My right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) recently visited it and was very impressed. There is a new conference suite and an indoor sports complex. Moreover, the annual report of British Rail shows that British Transport Hotels was gearing up to make a profit for British Rail. It had delegated responsibility to its managers. It had set up profit centres and was working towards making a profit. Morale has been severely depressed by the Government's attitude. As soon as it reaches that positive position, the potential for making money is hived off to the private sector.

Mr. Kenneth Clarke: As I am unlikely to have time to dwell at length on the subject of the Turnberry hotel when I wind up the debate, perhaps I should make these points clear to the hon. Gentleman.
First the deal leading to the privatisation of the Turnberry hotel was the creation of British Rail. It was not a Government decision at all. Preparations for it even predated our general decision on privatisation.
Secondly, how does the hon. Gentleman reconcile his demands for investment of various kinds in the main rail business with his total resistance to any money being raised on the subsidiary businesses? Those undertakings have been a drain on the main railway for years. They have been cut off from outside investment by being under the railway umbrella and thus will themselves benefit from privatisation while releasing money for British Rail. British Rail has kept a stake in the new company. It seems to have had £4·5 million to spare for acquiring shares. The National Union of Railwaymen has also acquired shares. how does the hon. Gentleman reconcile his attitude to this aspect with his earlier remarks?

Mr. Foulkes: I am grateful to the Under-Secretary for that intervention. But it contains two examples of doublethink. First, he pretends that British Rail came up with the proposal willingly, when in fact Ministers behind the scenes made it clear that if British Rail did not come up with some kind of proposal the Government would make it do something even worse. The Government twisted the arm of British Transport Hotels and British Rail to come forward with this proposal.
The second piece of double-think is that the Government tell British Rail that it cannot have further investment for its hotels and then use that argument to say that, if the private sector is involved, investment occurs. Investment is not obtained because of the limit put upon it by the Government. Those are two pieces of doublethink that the Minister's intervention has allowed me to expose.
I had hoped to hear the Secretary of State—I hope that the Under-Secretary will remedy this—say something about an "integrated transport policy". Those three words sometimes become almost a totem. There is, however, some meaning in them. What is needed is a rational policy of integration of air, sea, rail and bus transport, ensuring that there is no competition where this is harmful but that there is competition where it is helpful. We need to make sure that rail and air services link up sensibly and that there is no stupid rivalry. What we have from the Secretary of State is not an integrated, but a disintegrating, transport policy—a complete shambles.

Mr. Michael McNair-Wilson: I hope that the hon. Member for South Ayrshire (Mr. Foulkes) will forgive me if I do not pursue his line of argument. I should start by apologising for not having been present throughout the debate. I hope that this will not bear too heavily on the remarks that I wish to make. I welcome the new Secretary of State for Transport, especially because he has a Treasury training, which I believe will be of the greatest value when he examines the problems of British Rail and the National Bus Company.
I wish to concentrate on the National Bus Company and clause 4 of the Bill, which increases the financial limit of its aggregate borrowing. All hon. Members now present are, I am sure, aware that the National Bus Company came into existence in 1968 when Mrs. Barbara Castle was Minister of Transport. Under the terms of the commencing capital debt, it was prescribed that the debt should be repaid over the period from 2 January 1975 to 2 January 1984. One might have thought that this condition suggested that the amount of capital debt would be a fixed sum and that by the time 1984 was reached there would be some reasonable hope that the figure could be paid off. In fact, the capital debt of the National Bus Company has increased, if not annually, at least considerably, since 1968. It had a capital debt in 1971 of £99·6 million, in 1975 of £121·6 million and in 1980, according to the annual report, of £150 million.
Within the financial structure of the National Bus Company its entire capital debt is repayable debt which its creator who, I remind the House, was Mrs. Castle, assumed would be paid back from the profits which the company would make. In fact, the National Bus Company has been unable to make such repayments out of its profits. Its repayments have had to be met by taking out loans at


high interest rates, which have served only to increase the financial burden of the company, no matter how efficient its management
I was a member of the Select Committee that published a report on the role of British Rail in the 1976–77 Session. That report, in paragraph 288, stated, about the financial structure of the National Bus Company:
The National Bus Company is in the position of having its entire capital treated as a repayable debt. Since there is no prospect of such repayment from profits, the repayment instalments are met by taking out further loans at high interest rates, thus placing an increasing burden upon the company each year, whatever level of efficiency is attained by management. A comparable private sector business would generally display a capital structure composed in part of equity capital, in part fixed-interest capital and in part repayable loans. Both the National Bus Company and Scottish Transport Group—on whom similar obligations have been placed—have suggested that a more workable structure, in line with that of the private sector, could be adopted. The National Freight Corporation is also under a similar burden, described by its Chairman as 'a practice reminiscent of medieval usury'".
Paragraph 289 states:
At the other extreme, two public sector businesses have received 'public dividend capital', i.e. capital equivalent to equity capital in the private sector. One of these is in the transport sector, the British Airways Board. At the end of 1975 some £280 million capital was held in this form. The intention is that interest should be paid according to profitability, as in a private business. However, very little interest has in practice been paid by British Airways on this capital, which in the short run could be regarded as a 'hidden subsidy'".
Paragraph 290 adds:
Apart from the common element of loans from the National Loans Fund—interest on which is dependent upon the conditions of each loan—capital structures and repayment provisions appear to vary widely from one nationalised transport industry to another. The rationale for this is not clear, and in many cases arbitrary factors appear to be involved.
One might say that those words about arbitrary factors being involved apply peculiarly to the National Bus Company. I have suggested that it it operates a financial structure not only different from private industry but different from other nationalised industries. As it was set up in the period of a Labour Government, it is difficult to understand the choice of this extraordinary financial burden that it has to carry year after year and which, this year at least, has tipped it well and truly into the red. My right hon. Friend, who brings Treasury knowledge to the job, will therefore realise with just how much enthusiasm I welcome his appointment and how much I hope that he will do something to clarify this nonsense.
Its capital structure distorts the National Bus Company's financial performance. It damages the morale of those who work in the company. No matter how hard or efficiently they work, they still seem to find their company ailing and its financial burden increasing virtually year after year. In the past 10 years the National Bus Company's interest on its capital debt and its long-term loans has increased from £5 million in 1971 to £17·2 million in 1980. That may be one reason at least why the National Bus Company turned in a loss of £11·8 million in 1980.

Mr. D. N. Campbell-Savours: Will the hon. Gentleman accept additionally that it has the effect of preventing fair and reasonable competition with those companies that have been licensed as a result of the Transport Act 1981?

Mr. McNair-Wilson: That may be a different point. The National Bus Company's own express coach services

are doing well. I shall not therefore pursue an argument that I do not consider to be in the hon. Gentleman's interest but is an argument in mine.
The Bill provides a further £50 million of borrowing to the National Bus Company. I presume that, like so much of its borrowing, this money will come from the national loans fund. I should like to know from my right hon. Friend at what interest that money is to be loaned. Whether the £50 million will provide new cash for National Bus or will end up, like so much money in the past, providing repayments for the interest that it has to find on its capital debt, must be anyone's opinion.
The company may also require the additional £25 million over and above the £50 million to produce the necessary cash that it needs. But whatever is the case, this £50 million or £75 million will increase the National Bus Company's financial burden and will do little or nothing to ameliorate that burden. And so one may say "ad infinitum", for, because of its financial structure, I see no way by which the National Bus Company can ever repay its commencing capital debt and can ever get out of the hands of the lenders, even if the lender is the national loans fund.
I hope that my right hon. Friend will have the courage to stop what I can only describe as a nonsensical tail-catching exercise. I hope that he will look at the structure of the National Bus Company with a view to reconstituting it on lines which, even if they cannot be made absolutely comparable with those in the private sector, would at least be in line with the more favoured sections of the nationalised industries.
I add a local point. This autumn I visited the Newbury depot of the Alder Valley Bus Company which is the local subsidiary of the National Bus Company. Alder Valley sometimes calls itself Kennet Bus, and, on occasion I find it difficult to know where Alder Valley begins and Kennet Bus ends. But for the purposes of my speech, I shall refer to it as the Alder Valley Bus Company.
Those who met me told me that the company's earnings annually were about £1 million, and that its outgoings were about £1¼ million, of which £180,000 was its share of the National Bus Company's interest repayments. In other words, every bus operated by the Alder Valley Bus Company carries £6,000 a year of interest repayment. Needless to say, as the figures show, Alder Valley is running at a loss.
For Alder Valley to be able to continue to run the services that currently it runs, it must go to Berkshire county council for financial assistance. In other words, as a result of the financial structure imposed upon the National Bus Company in 1968, we have saddled it with a debt that it cannot pay, on which it pays increasing interest out of revenue which is ever harder to find and which, as it falls short of what it requires, must be made up by ratepayers.
This is an extraordinary situation. It is so extraordinary that I cannot believe that my right hon. Friend the Secretary of State will allow it to continue. Therefore, in supporting his Bill, I do so seeing it as a short-term measure, a bridging loan perhaps, until such time as the National Bus Company's finances can be put in order, and in such a way that it is not asked to carry this absurd burden of debt.

Mr. William Pitt: I have been present in the Chamber throughout the debate, but I have found little to give comfort to the hard-pressed commuters in my constituency, nor to those in London and the South-East in general. But it would be churlish to oppose the measures proposed in the Bill, if only because so little money is invested in transport in this country and transport undertakings are allowed to spend so little to improve transport. However, I am curious, as are other hon. Members, about the rather expensive, and third, change of heart that the Government have had over the docks. I should be very interested to listen to a further explanation this evening.
I shall confine my remarks specifically to rail transport in London and the South-East. I welcome the increase in the public service obligation grant to British Rail. It is welcome news about immediate revenue, but again it offers no hope regarding long-term investment. If we are to believe the Secretary of State's replies to proposals that BR put to him, it seems very unlikely that we shall get long-term investment.
In the Secretary of State's own words, his board's market research has shown that what the customer wants is most is better punctuality, reliability and cleaner carriages. I ask the Secretary of State to travel up to London on some of the carriages, which are not necessarily particularly dirty but terribly overcrowded, on some of the southern region commuter routes to Victoria and other London Stations.
In his reply to BR's proposals, the Secretary of State made it clear that, first, there would be fewer carriages. How it is possible to achieve economies from eliminating guards without providing the necessary new rolling stock with sliding doors is a question that is carefully ignored. At present, the annual turn-out of electric multiple units is 220, which would give us, in all, 22 10-car sets. Admittedly, most of these would be for London, but when most sets have a half-life of about 20 years and the other part of their life is very suspect, one sees very little prospect of any real change in the plight of the commuter who does not have a proper and decent train in which to travel.
While commuters would welcome refurbishment of old stock, one cannot take guards from the back of old stock unless one can put sliding doors in that stock. As far as I am aware, the existing BR commuter stock is incapable of being converted to take such doors, which means that if we want to take guards off the back of old stock, we must put new trains in place of that stock so that the trains can be efficiently and properly run without guards at the back.
I gather that we are to have what are described in the jargon as higher load factors. That is what the customer understands as more standing and overcrowding. This means that planned crowding is being incorporated into already unplanned overcrowding when trains are late or when they have to be cut for various reasons—mechanical, meteorological or otherwise.
Productivity will give little increase of comfort to South-East commuters because there is very little productivity that can relieve their plight on crowded trains, largely because most of the productivity there depends on how many men are on the trains. I have already explained my view on that matter.
There will be no money to improve travelling conditions—for instance, in much-needed station modernisation. Here I enter a little plea for Norbury station. After a normal rainfall, the platforms there are often awash with rain. On a particularly unpleasant day, passengers have to paddle through two or three inches of water to board their trains or leave them. With no more money for the modernisation of stations in the coming financial year, it seems that people using Norbury station and other unmodernised stations will have to continue paddling. Perhaps they should be issued with galoshes as they buy their tickets.
On a serious note, it is illuminating to compare the subsidies received from the Exchequer by various types of commuters making a specimen 25-mile journey to central London. The British Rail commuter enjoys a daily subsidy of about £1·50 through the public service obligation. I add, as an aside, that if that subsidy were increased just, for example, to £1·75 per commuter per day, such a commuter would gain immeasurably from the investment that that increased subsidy could provide.
However, the person who drives a car into London and parks free of charge in a company car park avoids parking fees of about £700 a year and taxation of about £1·25 a day. If the car in which he drives is an average—size company car, the daily subsidy from the Exchequer—not from his employer—amounts to more than £9 if he pays tax at the standard rate and more, obviously, if he pays tax at a higher rate.
That means that the commuter to London who uses a company car is subsidised to six times the extent of the subsidy given to the person who has to come into London by rail. The worst case is the company car user who parks on the street. He is probably subsidised to the extent of £12 a day for his car and £1·25 a day for the space he uses, which is approximately nine times the subsidy enjoyed by the rail user.
Clearly, in that case the tax regime under which company cars are operated is unfair and objectionable. It is especially nauseating to the hard-pressed, mortgage-paying commuter to be lectured on the evils of subsidised fares by members of the Institute of Directors and other such bodies, all keen supporters of the Government, who are not only provided with company cars but with petrol with which to run them, virtually untaxed. There is one set of standards for commuters and another set for those who enjoy pleasantly subsidised company cars.
I offer one policy to the Minister that he might consider carefully—the tightening up of parking in London. The number of traffic wardens has fallen from 2,100 in 1975 to 1,300 in 1981. Some may not believe that, but it is the fact. That is not because there is no work for them—far from it—nor because none can be recruited. It is because the Government are playing the numbers game with levels of public service staffing. The systematic contempt of parking regulations by motorists, because the chance of receiving a parking ticket is so remote, and the means of avoiding payment is so easy, is a matter that demands attention from the Government. It is a national scandal that 5 million parking tickets issued in London during the past 10 years have gone unpaid.
If the Government put their system of levying fines in order, that could provide a source of funds from which to raise the level of investment in public transport. We would especially wish that that money was used to improve productivity and provide reliable equipment. It is


incredible that the Government should be so doctrinaire in their approach to public transport that London, still the financial centre of the world, expects to spend less to support the provision of a decent public transport service than almost every other capital city.
The Secretary of State has shown himself insensitive to the needs of commuters in calling for more crowded trains, fewer new carriages and more productive use of railway staff without the necessary investment. The transport services of London and the South-East, both those of British Rail and London Transport, have declined in quality and will continue to do so unless more money is spent on them.
I speak not only about the passenger transport services. In South London especially we suffer from the juggernaut, which is not the subject of the debate. As I remember saying earlier, if we had built the rail link to Nine Elms we might have enabled railway investment to grow at a greater rate, because much of the heavy goods that now trundle up the Brighton Road and the A2—and other roads that were not built for juggernauts—could have been moved to the railway tracks, most of which already exist and could have been used more profitably than they are now.
I wish the private car to be put firmly where it belongs—not clogging up central London or the suburbs, while moving towards central London, so that people can get in to work. It should be used for long-distance driving and pleasure. If the Minister was to take that suggestion on board, it would produce not only a useful source of revenue for a much-starved British Rail, but would provide a more pleasurable existence for thousands of people who do not necessarily travel by train but who are fed up to the back teeth with being clogged up in traffic jams and inhaling carbon monoxide fumes when they are trying to go about their daily work.

Mr. Sydney Bidwell: I start by declaring my interest as a Member sponsored by the Transport and General Workers Union. I also remind the House that we have a Select Committee on Transport that has been hard at work since it was set up. It is a new feature of Parliament that Select Committees are now involved with every Department of State. What will happen if we are sensible is that we shall emerge with an exhibition of not too many differences and a concentration on practical considerations.
The Leader of the House, in the debate on the Queen's Speech, spent about 10 minutes telling us how much more proficient Parliament is compared with the position before the new system developed. If he puts that emphasis upon our work, one hopes that the Prime Minister and the Secretary of State for Transport will also do so. The Secretary of State will find that—I shall not say that it is the finest body of men ever put together—the Select Committee on Transport has assembled Members of the House with a considerable background and experience in transportation. If we speak unanimously, logic says that the Government must pay close attention to us.
We are engaged in a major study of urban transport and the London traffic mess. We are handicapped in this debate because we must not make direct reference to the current GLC fares scheme. However, the broader aspects of that problem must be part of a consideration of London's transport system. It involves a certain amount of

philosophy. We welcome the hon. Member for Croydon, North-West (Mr. Pitt) to debates on transport. He will find that he has much to learn when he rubs shoulders with those of us who have been involved in transportation debates for a long time. A consensus must emerge. The Secretary of State has already heard in the debate—which necessarily gave rise to wide-ranging thoughts about transport problems, the sufferings of commuters and those who have juggernaut lorries trundling past their front door, with whom we sympathise deeply—about the wide circumstances that arise from a limited Bill that we shall examine with more care in Committee.
If the Secretary of State had considered carefully the evidence of the National Bus Company, he would have seen that it has a considerable argument about its longstanding and long-running capital debt, about which it has been complaining for a long time. One hopes that, whatever else arises from the existing circumstances and the Government's attitude towards assistance to the National Bus Company, it will not lead, as one participant has already suggested, to putting old vehicles on the road. A proud record of the National Bus Company has been the turnover of new vehicles. Those vehicles are always kept up to date, which must lead to a better and more efficent system. That policy is followed in the case of company cars for directors. The economy of the matter suggests that if there is a large turnover of cars, they will be more efficient and will break down on fewer occasions.
That is the proud record of the National Bus Company. However, it is now affected by other considerations, such as the doctrinaire Transport Acts of 1980 and 1981. Some of us served wearisome hours in Committee considering those measures. The new Secretary of State has some Treasury experience. Although I do not know whether that commends itself to most hon. Members, it may be that he has blown in as a refreshing breeze. The proof of the pudding will be in the eating. His predecessor was regarded as a hard case and an avid Tory. However, we have not seen much evidence of that during these long exchanges.
I must not pre-empt the Select Committee's report, which I hope will contain some sensible conclusions. However, its members have travelled in the United States, Canada and Western Europe in search of truth and knowledge. They wanted to know whether they could learn from the experiences of other civilised countries. We have learnt a great deal. The Select Committee will report to the House. It is not a handmaiden of Government, rather it is a Government tool. Ultimately, we shall present practical proposals based especially on what we have recently learnt from our visits to those other countries.
It is fair to say that we are not hooked on the doctrine of privatisation. We seem to be hooked on the idea of some form of integration, but that may not necessarily be the old-fashioned ideas of the Labour Party. Over the years, our debates have involved certain sloganising about integration and co-ordination of all forms of transport. But what was appropriate in the 1920s, 1930s and 1940s must be re-examined in the light of events. In any case, we need a heavyweight surveillance of transport in all its forms, and that is particularly so of London.
The question of London will be examined and re-examined in the light of the evidence that the Committee has taken. In particular, we must consider the illogicality of the GLC's domain. The bulk of the London Transport railway network system is to the north of the Thames.


There is a long history of curtailing underground development south of the Thames because the Southern region was the pioneer of electric traction.
I was amused by what the hon. Member for Huddersfield, West (Mr. Dickens) said about the old days of railway competition. There is no railway competition. From 1921 onwards, one could never talk about railway competition. The various railway companies reached agreements and pooled ideas. At that time, we had such things as the railway clearing house. The railway system was over-ripe for nationalisation when the Labour Government nationalised it in the post-war period. A lot of nonsense is talked about these matters. We are certainly not looking for fierce competition between the various modes of transport, although views may differ on accent and emphasis.
I am glad that hon. Members, particularly my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), laid emphasis on the affairs of the National Bus Company. The bus and taxi workers must be involved if our transport system is to develop. Those workers must be willing partners in any new concept.
Some hon. Members may have seen the article in The Sunday Times alleging that British Rail had clashed with the Secretary of State over an electrification plan. It should be borne in mind that the leaders of the railway workers confront these problems in the interests of the people they represent. They want not only a modernised railway system, but better pay and conditions for the work force.
It may well be that the Government will get co-operation from the workers by shedding some jobs. But as a former railway worker, I have never been enamoured of the idea that productivity could mean having no railway workers on the trains. As the hon. Member for Croydon, North-West said, there is still a powerful case for retaining someone to be in charge of the train other than the driver. That was the origin of guards. I was a freight guard for many years, but I often worked on passenger trains.
The vast majority of our road workers are freight workers. In spite of what the hon. Member for Croydon, North-West said, the bulk of the nation's freight transport will continue to be carried by road. However, I concede that a powerful case can be made for a change to rail—for example, with regard to explosives and certain other traffic.
The Government must deal with the workers involved in the industry. They are dealing not with unorganised workers but with people who have a rich tradition of trade union organisation. They expect to be consulted all along the line. The transport workers are not unprogressive. They realise that the transport system of the 1920s is not suited to the 1980s. They will be co-operative, but the Government must be realistic. They must recognise the importance of the transport workers to the economy. It should be remembered that as we speak thousands of workers are involved in our transport system, many of them throughout the night. If we want their sons to be involved as well, we must give them a fair crack of the whip.

Mr. Peter Fry: First, I apologise to the House and to my right hon. Friend the Secretary of

State for missing his speech. I have been acting chairman of the Select Committee on Transport for most of the afternoon and early evening. Hence my late arrival.
Secondly, as on previous occasions, I declare my interest in the National Bus Company.
It is a pity that the hon. Member for Croydon, North-West (Mr. Pitt) has left the Chamber. I did not intend mentioning the London problem, until I heard the hon. Gentleman trot out every environmental prejudice that I have ever heard in my life. I do not know how many of the hon. Gentleman's constituents are members of the Institute of Directors, but, even if they received no subsidy at all, there would be little additional money available for the rest of his constituents who daily commute by rail.
The message that seems to come from the new alliance is "God help you if you own a car, because we will clobber you." I hope that that interesting message wings its way further north before Thursday morning. It was interesting that, yet again, we heard a recital of the ways in which more Government money should be spent, with only an airy-fairy indication of how it should be provided.
Various comments have been made about the fact that the Secretary of State has come from the Treasury. Like my hon. Friend the Member for Newbury (Mr. McNair-Wilson), I welcome my right hon. Friend to his new post. When my right hon. Friend first saw the Bill, he must have said "Good heavens, am I a member of a Conservative Government? If ordinary people look at the Bill, they will see an initial increase of £3,000 million to £6,000 million payable to British Rail, with provision for another £4,000 million by order. Is this the skinflint Government that will not invest in public industry?" There are signs in the Bill which clearly show that the Government are investing, dare I say it, far too much money in public industry.
I am particularly concerned about the £200 million grant increase for the Port of London Authority and the Mersey Docks and Harbour Company. I shall not venture, as the hon. Member for Liverpool, West Derby (Mr. Ogden) did, into the affairs of the Mersey company, but everybody knows that the Port of London is dead, and the problem is that we have to pay the corpse millions of pounds of taxpayers' money because it will not go away. It is high time that the Government settled the Port of London problem, grasped the nettle and accepted that the port is finished. The taxpayer must be relieved of the responsibility.

Mr. Nigel Spearing: The PLA is not finished. London is still Britain's biggest port.

Mr. Fry: The main expenditure in the Bill relates to British Rail. As I understand it, the Bill is merely a continuation of previous legislation and effectively tops up the amount made available for what is known as the public service obligation of British Rail—what Sir Peter Parker is fond of calling his "contract" with the Government.
As an EEC member, the United Kingdom is bound by regulation 1191/69, which allows member States to support certain transport undertakings. There is no dispensation in that interesting document to pay for anything like the public service obligation. It specifically allows for payments
in respect of any route or installation.
They are specific words. British Rail is paid annual vast sums which are not specific. I hope that my right hon. Friend will answer that point, but perhaps we shall learn the answer in due course.
We are presumably supposed to adhere to regulation 1191/69, which provides that support should be
the least costly to the community".
The regulation continues:
The adequacy of transport services shall be assessed having regard to the possibility of having recourse to other forms of transport and the ability of such forms to meet the transport needs under consideration.
That brings me to the money being made available for British Rail. It is no great secret that large portions of the British Rail network, loosely called "the country services", are hopelessly uneconomic. I appreciate that my right hon. Friend's predecessor—for whom I have the greatest admiration and regard—went on record in the early part of his office saying that there would be no cuts in the British Rail network. I have felt that that statement may subsequently have been a slight embarrassment to British Rail, which knows perfectly well that an enormous amount of taxpayers' money subsidises lines which are little used, particularly by passengers.
If the Secretary of State and the Government are serious in their attempt to check the unnecessary expenditure of public money, it is high time that they reconsidered the economics of country lines. We must maintain the intercity service and the community networks for our major conurbations. However, if we are to adhere to the EEC regulations, is it not time that we considered alternatives to the existing expensive rail services which are not being used? I hope that my right hon. Friend will consider the matter afresh.
As a member of the new Select Committee on Transport, I know that it has reiterated the decision of the previous Select Committee on Nationalised Industries regarding the finances of the National Bus Company. It is strange that we are contemplating an enormous increase in the amount of money to be made available to the rail user over the next few years, whereas most of those who travel by public transport will receive a very small subsidy.
I appreciate that it is difficult to make comparisons between rail and bus travel. If one considers passenger mileage, which is probably the best comparison, one discovers that the rail user is subsidised four times more than the bus user. However, the majority of people who use public transport travel by bus. I do not believe that the present situation should be allowed to continue. It is not only the National Bus Company that finds life difficult. Every bus operator finds it difficult to make a profit, particularly with the problems of replacing worn-out vehicles.
The Bill concerns subsidising, and we are talking about subsidising the transport sector.

Mr. Ogden: The hon. Gentleman seems to be under the impression that the Bill will physically provide money for British Rail, bus transport or the "corpse". However, the Bill provides not a single ha'penny for those organisations. It provides the possibility, with the good will of the Government and the Secretary of State of the day, that organisations may borrow money from somebody else or, in a limited number of circumstances, may obtain a loan or grant from the Government.

Mr. Fry: The hon. Gentleman will surely agree that the PSO will represent the greatest chunk of money in the Bill. I appreciate that my right hon. Friend the Secretary of State will discuss with British Rail next week the size

of the PSO for the next year. I do not deny that that is necessary, and I am not suggesting that British Rail breaks even or that it should receive public money. However, there is a large discrepancy between the support given to British Rail and the rail user—we must be particularly concerned about the transport user—and the support given to bus services.
British Rail is subsidised far more than bus operators. Problems will continue in relation to bus services, no matter how many experiments are introduced by the Secretary of State, until the nettle is grasped and we decide how far to subsidise public transport as a whole. I am trying to point out the differences between the amounts given to rail users and those available to bus users. If the Government are serious about providing an effective transport system, they must answer that question.
The most important aspect of all is that the moneys are not payments for transport—they are social service payments. No Government have ever faced that fact. They always pretend that the money is for transport expenditure, but it never has been and never will be. Despite the passes for old-age pensioners and young people the cost of transporting them is the same, no matter how much the bus company or British Rail has to charge them.
There is an opportunity for the Government and the new Secretary of State to look again at the subsidies for public transport. I hope that the Secretary of State will bring the analytical mind of an ex-Treasury Minister to bear on the problem. The country is crying out for a transport policy that accepts the realities and is not based on myths such as those I have tried to explain.

Mr. Booth: I am appalled at what the hon. Gentleman is saying. Is he aware that our total subsidy for public transport is probably lower than that of any other EEC member and that the amount that BR collects in fares as a proportion of total operating expenses is probably higher than any other railway system in the EEC? Is he suggesting that the other EEC Governments live not in the real world but by myths?

Mr. Fry: That is not what I am saying. The money spent is not transport expenditure—it is social services expenditure and should be treated as such. Looking at it in that light might lead to equal treatment for the various forms of public transport.
The Bill follows historic precedents. British Rail is subsidised enormously, although every year it and the Secretary of State have words about the level of the Government's contribution. Because the National Bus Company has to break even each year, it ends up with mounting debts. That is not very sensible.
There are transport costs which are constant, no matter how efficient the operator, but if that operator has certain social obligations to provide a service, whether rail or bus, there is also an obligation on the Government to underwrite that as a social services, not a transport, cost.
It is not that I believe that there should not be a degree of subsidy. No rail system could run without a subsidy. But we could run the inter-city and commuter lines without such a large subsidy if we considered the future of the country lines. More money would then be available for investment. The right hon. Member for Barrow-in-Furness (Mr. Booth) was right when he said that British Rail had been starved of investment. There should be money for


electrification. It would take only £20 million a year for five years, rising to £30 million a year for another five years, for British Rail to have a fine, modern system,
However, for years we have been stuck in a mould of financing public transport—a mould which the Bill perpetuates. We shall continue in the same way until one Secretary of State grasps the nettle, looks at the question again, and realises that subsidies for most public transport should be the responsibility of another member of the Cabinet.

Mr. Bob Cryer: I shall be intereste in what the Secretary of State says about the way that the Bill affects the external financing limit. If the public service obligation grant is increased, will that be within the framework of the external financing limit which will then force British Rail to cut down its borrowing requirement? What British Rail needs is the ability to undertake extensive investment. I shall cover one or two points and then give examples of the effect that the lack of investment is having.
We have heard about the need for electrification, and British Rail has announced that its electrification team is to be broken up. It will take at least 12 months to reassemble the team, and it is possible that its expertise will be scattered throughout the world, with former team members gaining employment in other countries where the electrification of railways is going ahead, making the team irrecoverable for at least 12 months.
The hon. Member for Wellingborough (Mr. Fry) spoke about the country areas, where services are much appreciated. They are maintained by ageing diesel multiple units. The same is true of urban areas outside the London region. British Rail wants to provide good services to its passengers and to attract more passengers, but it cannot do it if maintenance work is pared to the bone so that, if there is a difficulty with 20-year-old DMUs—and I accept that a portion of the fleet has been refurbished—maintenance facilities are scattered so far and wide that often it is difficult to get out maintenance fitters to do the necessary work. It is a frequent experience at my own station of Keighley to join a diesel multiple unit which is being locomotive-hauled because there has been no time or opportunity to repair the DMU at its base at Morecambe. This is a very costly exercise, and it is only necessary because of the lack of investment by British Rail on replacing its fleet.
There are two experimental vehicles in operation—one is a multiple unit and the other is a rail bus. But I have no doubt that the Minister will say that he has received no plans from British Rail for an investment programme to replace the DMU fleet.
British Rail's difficulty is that it is living from hand to mouth and has to wrest every penny from the Government even to maintain existing services, without embarking on a massive investment programme necessary to replace the fleet. However, the Minister can help. He can say to British Rail how much he will welcome proposals from it for such a replacement programme. One of British Rail's difficulties is that, because it is not sure how electrification will be proceeded with, some areas will have their multiple fleets replaced by electrification. If the area north of

Hitchin, for example, is extended by electrification a number of diesel multiple unit links will be released for use elsewhere.
If the Minister is prepared to say that the Government are willing to finance the investment necessary to replace diesel multiple units, British Rail will be able at least to plan with some certainty. That is an opportunity which I invite the Minister to take. Services in West Yorkshire badly need replacement vehicles.
I want to illustrate how the curbs on investment imposed by the Government on British Rail work out in practice. The Eastern region is near break-even point, give or take a few million pounds. But other regions are looking for ways to make ends meet. I suspect that the London Midland region has decided that it will make ends meet by closing the Settle-Carlisle railway—76 miles of country route of the kind referred to by the hon. Member for Wellingborough who, from what I gather, is a bus and road spokesman—to take away expenditure which it would much prefer to embark upon to maintain a valuable railway system.
Such a decision will affect my constituency. It will reduce services at Keighley station. It will mean a diversion of the Nottingham-Glasgow services. British Rail proposes to introduce this change in May 1982. It will mean passengers in the Leeds and Keighley areas of West Yorkshire no longer having direct services to Glasgow and as far south as Nottingham. In addition, there is the proposal to remove entirely all inter-city links between Leeds and Nottingham. It is not just the country routes which are affected.
What is the reason for that proposal, apart from simply wanting to get rid of the cost of maintaining the line? The reason, according to British Rail, is that the cost of maintaining the Ribblehead viaduct—which it has suddenly discovered, although it has been working on it for the past 20 years—will be several million pounds, if it is to be made structurally sound. In my view, British Rail is using that as an excuse to offload its debt in order to break even—a requirement that the Government place on it.
To close the line would be an enormous tragedy. The railway provides services, not just between Settle and Carlisle, but also in my constituency. The biggest revenue-earning point is Leeds, so there will be a diminution in British Rail revenue. The line also enables people, in a scheme which is unique in this country, to go without cars into the Yorkshire dales, with bus-linking schemes at some of the stations. It is an experiment which has proved extremely successful, and it was pioneered by the Yorkshire dales national park. It takes thousands of people into the dales to enjoy the beauty without the accompanying problems of thousands of cars, either parked or crowding the roads.
If the services are diverted, as British Rail proposes, and lower standard services are substituted, I believe, as do many others, that it will be a back-door method of closing the Settle-Carlisle railway. My hon. Friend the Member for Carlisle (Mr. Lewis) is present and would willingly endorse what I say. Because of the beautiful nature of the line and the extraordinary scenery that it passes through, and because of the nature of the dales rail experiment—which has been successful, has revived several stations, and is much appreciated by the people of


the area and further afield—the Government should say "Yes. Investment is needed in the short term—not a long-term scheme, but here and now."
This is another example of how big public organisations such as British Rail tend to skimp when they are short of money. Seven years ago, for example, Ribblehead viaduct was not waterproofed—to save money. It can be argued that the present difficulty is a consequence of that decision. I understand that the London Midland region has already halted all track replacement expenditure and all further work on the Ribblehead viaduct and associated viaducts along the line.
We are talking about a national asset. I am sure that the story can be repeated elsewhere. It behoves the Government to provide additional expenditure so that a region of British Rail should not be put into the position of having to break even, as it is being asked to do by the Government.
I want to comment on the whole British Rail network, with particular regard to what the hon. Member for Wellingborough said. He seemed to be very critical of the support that the Government give to the non-paying services run by British Rail under the public service obligation. We have an 11,000-mile network of passenger services in this country. They are a vital national asset. Our oil reserves are finite. Whether or not additional oilfields are found to extend our oil reserves from 25 to 30 or 35 years, they are finite. The railways represent a vital form of transport for our people. If the Government allow the 11.000-mile network to be diminished in any shape or form now, because of temporary financial difficulties which they have imposed on British Rail, it will be a loss for future generations. We shall need virtually every mile, and more, of the passenger network.

Mr. David Gilroy Bevan: I have listened with great interest to the debate and I am amazed by the amount of accord that seems to exist on both sides of the House on the basic issues.
My background is that I was honoured, before being elevated to this honourable House, to chair the West Midlands county council transport and highways department. Before that, I chaired the West Midlands passenger transport authority and before that, the city of Birmingham transport authority. Therefore, I have a deep and abiding interest in public transport. We found it possible to integrate public transport, although it is said that that is not being done elsewhere.
I pay tribute to the Labour Government. Much as I opposed the Transport Act 1968 at the time, it gave us an opportunity to integrate and we found that we could put together schemes at very little cost. We built five new suburban railway stations—the first in the country—and refurbished another seven stations. We provided completely refurbished stock. We joined one side of the city to the other, from Four Oaks to Longbridge. We created over 50 marshalling service facilities at Tysley and upgraded all the suburban railway services.
The cross-city line led to a 3,000 per cent. increase in passenger utilisation. There will come a time when the refurbished stock, with new brakes, new exhaust systems and internal furnishings, will come to the end of its life. Some of the stock was 20 or 30 years old when we refurbished it. Therefore, at some time the refurbishing question must be faced. I note with interest that as a

prerequisite to firmly joining—I hope—EUROFIMA we shall at least have a Government guarantee that our membership will be paid. Indeed EUROFIMA is an organisation of 16 countries that will examine similarities in stock and possible areas of standardisation. We shall then be able to examine the possibility of buying standardised stocks at cheaper prices than our techniques and our buying facilities in this country might allow. When the Secretary of State has had a chance to analyse the tests on the two-car train—and whether it can stand the various stresses that will be placed on it—and when he has seen the proposals for the new multiple unit, the time will be right for renewing stock. After all, it must be borne in mind that that will have to be done.
When I go to the local station that I had the honour of planning—"Birmingham International" station, near my constituency—I might have to wait 20 minutes or half an hour for the excellent train because urgent attention should be given to refurbishing and repairing railway lines. Line maintenance and replacement should be given the first priority. Electrification is also important, and the Government have committed themselves to that over a steady 10-year programme. In addition, new stock is necessary.
I agree with Opposition Members that the railways are part of our national heritage. As the hon. Member for Keighley (Mr. Cryer) rightly pointed out, it is essential that our public transport system should not be wound down. The newly appointed Secretary of State has said that he does not believe in railway cuts and intends to keep the lines and services in existence.
I come back to the comments of my hon. Friend the Member for Newbury (Mr. McNair-Wilson). I well remember the Select Committee on which he served in 1966–67 because I had the honour to give evidence to it in the House. He mentioned that the Transport Act 1968 was created in an unfair manner and gave an unfair form of accounts to the National Bus Company. That is true. It also allowed the heart and guts to be taken out of the NBC in the cities. I know that, because it was my job to negotiate the purchase of the Midland Red Bus Company in the West Midlands for about £4 million, which the National Bus Company had to pay back.
I give another warning. We are now in a position where morale in British Rail may be low because of privatisation, although some areas should properly be privatised. Let us not be guilty of doing the same thing with the National Bus Company. As soon as we have given it the extra money—we are increasing its borrowing limit by £50 million to £250 million—let us not force it to sell its motorway express undertaking, which is giving the very profitability that will reduce the amount of subsidy and borrowing that will be necessary in the future. I hope that we do not immediately siphon off those areas and merely leave the parts that cost the money and need the subsidy.
The hon. Member for Croydon, North-West (Mr. Pitt), in a flippant speech—on which I congratulate him—"bashed" the motor car. But in transport we should get the mix right between trains, freight, buses and cars—jeopardising no one as far as possible. That is not abusing the transport system as, for example, the West Midlands metropolitan county council is doing at present, where there are the most ridiculous and extreme reductions in fares. A child can travel anywhere in the city at a 2p


fare and can create much nuisance and vandalism. That is an abuse and that is why the Government must find subsidies.
Surely this Bill is good news. It includes an increase in British Rail's borrowing powers of £200 million to £1,100 million; an increase of grant to the board of £6 million with another £10 million to be given as and when necessary; the joining of EUROFIMA; and the increase to the National Bus Company. Surely the proposals on the docklands must be admired, whether in Merseyside, the City of London or the Isle of Dogs as an enterprise zone. We are getting to grips with the matter. Money is being made available to transport. I congratulate the Government on getting the balance right and I hope that the good work will be kept up. Like all hon. Members, I hope that the Channel tunnel will be built and I should like a car extension in the future, if possible. I should also like rolling stock to be refurbished.
There are lessons to be learnt from the 1968 Act. One may be that it is necessary, for example, that the monster that we created in the form of the metropolitan county councils should be wiped out and that we should return transportation areas to the areas that existed over meaningful distances when we formed the passenger transport authorities. I congratulate the Government and wish the Bill well. I am certain that it can only be good.

Mr. Ron Lewis: I must declare my interest because I am a member of the National Union of Railwaymen. I am sure that my union will be delighted with some of the remarks uttered by the hon. Member for Birmingham, Yardley (Mr. Bevan). If a Division takes place, I hope that the hon. Gentleman will express his feelings by supporting the Opposition.
Transport, especially rail transport, seems to be demoted to the bottom of the league table by most Governments. I have the honour to represent what was one of the best railway cities in the United Kingdom. In the days before nationalisation seven railway companies ran to the Citadel station at Carlisle. British Rail used to be the largest employer in the city. I regret to say that that is no longer so. Since the Beeching proposals, we have been well down the rail transport employment league table.
I take up the remarks of my hon. Friend the Member for Keighley (Mr. Cryer) about the possible closure of the Ribblehead viaduct. In April the joint branches of the railway unions in Carlisle heard that the viaduct was to be closed. They saw through that closure the beginning of the end of the Carlisle-Settle railway.
Railwaymen are rightly suspicious. There is always the tendency to start a gradual rundown and to use that as a reason for final closure. My constituents are worried. I met them, and arising from that meeting I contacted the general manager of the London-Midland railway. I asked him whether he could tell me what was happening about such a rare piece of railway line. The deputy manager informed me that there were difficulties. He said that it would cost slightly more than £4 million to make the Ribblehead viaduct operational. He added that no decision had been made on the region's advice. He assured me that when a decision was taken he would advise me so that my constituents could be informed. That is where we stand.
The general cry from both sides of the House and from the three or four parties whose representatives have contributed to the debate is that we must have more Government investment in better transport, whether by bus or by rail. We appreciate what has been done for the railways, but my union feels that, unless there is more investment, British Rail and many of its lines will be dragged to a complete halt within a few years because of outdated equipment and machinery.
I am told that it would cost about £4·5 million to put the Ribblehead viaduct in operation. I believe that we can save that wonderful piece of railway line to which I have referred. As my hon. Friend the Member for Keighley said, it is one of the most picturesque stretches of the London-Midland region's network.
Therefore, I make a plea to the Government on behalf of my constituents. It is nothing short of criminal that the Government should quibble over a mere £4·5 million to repair a viaduct that has stood for 114 years, but give the go-ahead for the spending of £35 million on a spaghetti junction. Where is the difference? Spaghetti junction has been in operation for only 10 to 12 years, yet £35 million can be found for it. When it comes to investment on the line, we should not forget that employment is involved and that it will make a lot of difference to people in that far corner of the North-West. I appeal to the Minister to have another look at that matter. I hope that British Rail will also reconsider it.
Mention has been made of the qualities of the chairman of British Rail. I endorse everything that has been said about his personal qualities. I believe that Sir Peter Parker is respected by most railwaymen. However, I also believe that he would be more greatly respected if he acted as did the chairman of the British Gas Corporation and staked his claim for more investment to save British Rail.
I hope that the Minister will not treat the matter with his characteristic disdain. I know what he will say. He will say that the Government give the money, but it is a matter for British Rail. However, not only the Ribblehead viaduct but a number of other areas are gradually declining because of lack of money. I hope that the chairman of British Rail will show his grit, as did the chairman of the British Gas Corporation, when he meets the Minister next month and that he will join the unions in going all out for more investment in British Rail.

Mr. D. N. Campbell-Savours: The House will be grateful to my hon. Friend the Member for Carlisle (Mr. Lewis), who has so eloquently put the case on a matter that is of considerable concern in Cumbria. He has championed his cause not only in the House but in the county. I also thank my hon. Friend the Member for Keighley (Mr. Cryer) for the way in which he effectively reinforced the case.
The hon. Member for Southampton, Test (Mr. Hill) spoke about heartache. A part of the Bill that will lead to increased heartache is that which increases, in my view insufficiently, the facility for financial borrowing of the National Bus Company. The National Bus Company has major financial difficulties which stem from a number of factors. One is the decision last year to reduce the external financing limit of the National Bus Company. Another is the cuts in the transport supplementary grant and their effects on revenue support. The Government have made a commitment to phase out that support.
There has been a reduction in the commitment by many county councils, certainly Conservative-controlled county councils, in their transport policies and plans to suggest a sufficiently large amount of money to maintain the services necessary fully to service their constituents. The reason for that is that they have to make a contribution. They find that unacceptable in the light of the other requirements of the Government to cut back on local services and local spending.
Cuts in bus grants were introduced by the Secretary of State for Transport in the Labour Government who has departed for another political party. He was, of course, introducing or requiring those cuts at a time when the other changes on transport legislation—as with the cuts today—had not been introduced. There is also the operating profit requirement that the National Bus Company should make a profit of £18·5 million by 1984–85.
Finally, there is the matter of competition which was introduced in the Transport Act 1980. I shall address my remarks to that subject because the requirement for competition which has been imposed on transport undertakings throughout the United Kingdom has led to much of the difficulty experienced by the National Bus Company today. In my view, that will lead to demands for an increase in EFL and certainly to demands for higher borrowing, more than is suggested in the Bill. If greater amounts of money are not borrowed, or if the EFL is not increased, taking into account the requirement for profitability by 1984, it is clear from evidence which I am told was given to the Select Committee that 60 million service miles will be cut out of the national bus programme by that time.
In referring to the changes in competition, I remind the House of a debate which took place in March 1980, soon after I was elected to the House. During the Report stage of the Transport Bill a number of exchanges took place which were the subject of much public comment in Cumbria. They stemmed from answers and undertakings given to me one and a half years ago by the Under-Secretary with regard to services which existed in parts of my constituency and other parts of the county. I shall quote my own words and the Under-Secretary of State's reply.
I referred to the fact that in my area there were a number of small villages, including Aspatria, in the Home Secretary's constituency, Brigham, Broughton Moor, Ireby, Bothel, Lamplugh, Deanscales and a number of other small communities where bus services were losing money. I asked the Under-Secretary what action the Government intended to take to ensure that those routes would be preserved. He replied:
Its non-profit-making rural routes will be supported, like others, by revenue support and transport supplementary grant. They are not adversely affected by the Bill.
After a number of other interjections I asked the Minister.
What will happen to undertakings in counties such as Cumbria if certain routes are removed from the municipal undertakings and given to private enterprise?
The Under-Secretary replied:
They will not be removed."—[Official Report, 24 March 1980; 'Vol. 981, c. 988–90.]
In the county of Cumbria that response was seen as an undertaking and a promise to my electorate and to the electorate of Cumbria that, whatever the effects of the Transport Act 1980, they would not damage those rural routes.
In that debate I referred to some enterprising young operator who might turn up and apply to take over the profitable routes of CMS. It was in response to that that the Minister suggested that the routes in my constituency would be adequately protected.
Eight months ago, the enterprising young operator turned up and applied for the profitable routes of Cumberland Motor Services, as had been forecast in the House. I understand that the commissioners refused the application, but that, on appeal, the Minister intervened and overturned the commissioners' judgment. The result was that Yeowart's Coaches, the enterprising operation, was able to set up on the profitable routes of CMS. The matter was not heavily publicised and little was heard from anyone apart from CMS locally to suggest that a number of minor routes would be lost as a result.
Last week I received a letter from a Captain James, of Hallgarth, Eaglesfield, Cockermouth, saying:
The people of this village are appalled by the news that the No. 25 bus service to and from here is to be cancelled on November 28th 1981. This will cause considerable hardship and inconvenience to a large number of our people, many of whom are old-age pensioners and have no means of getting their requirements other than by bus to Cockermouth.
He continued:
Whilst most of us appreciate that a service of any kind must be profitable, we cannot understand why a whole community must be cut off because some competition has been introduced which does not even affect this area in any way, so we ask you to reconsider cancelling our bus service.
That gentleman's letter to me was but the tip of the iceberg. Further examination revealed that Cumberland Motor Services had withdrawn six rural routes in West Cumberland. So that the Minister cannot escape from the reality of the legislation that he introduced, although I am sure that it has dawned on him, I quote from the views put to me by Cumberland Motor Services:
these cuts are as a direct consequence of the abstraction of revenue and the cost of the resources needed to limit that loss of revenue created by the new town service in Whitehaven operated by Yeowart's coaches.
In fact, with the exception of Services 62, 63 and 64 the other services were on the original list of examples of services that could be at risk, as given at the Traffic Commissioners' hearing in connection with Yeowart's original application.
In other words, when CMS asked the commissioners not to grant the application, the possible loss of those routes was given as a reason why it should not be caused to lose the funds which it used for cross-subsidisation. The letter continued:
I also wish to confirm that the withdrawal of Service 25 will effectively leave the village of Eaglesfield without public transport other than for the odd school journey which serves the village by way of diversion of other services. As far as normal social, work and shopping journeys are concerned the village will be depleted of services.
That was followed by a letter from Allerdale district council. Again, that is an authority to which I referred one and a half years ago in objecting to the introduction of the legislation. Allerdale district council stated:
The effect of this approval has resulted in Cumberland Motor Services lodging counter proposals to make up an estimated loss in revenue which might result by the introduction of Yeowarts service. The Company propose to withdraw certain services not only in the Whitehaven area, but also in Allerdale. My Council are very concerned as Cumberland Motor Services proposals, if successful, will mean the complete withdrawal of some rural services with the consequent effect this will have particularly upon school-children who rely on these services and commuters, generally.
In other words, the legislation introduced by the hon. Gentleman, and defended by him at the Dispatch Box with


undertakings to my constituents that the rural routes would not be lost, has led directly to the loss of six rural routes. I submit that the Under-Secretary of State totally misled the House of Commons, the people of this country and my constituents who have now lost the vital services which they should have.

Mr. Kenneth Clarke: As the hon. Gentleman knows, that has nothing to do with the Bill. He will also realise that I shall not have time to reply to his comments when I reply to the debate as we cannot have an Adjournment debate on bus services in Cumberland in the middle of a debate on the Transport (Finance) Bill. I undertake to reply to him, but I hope that he and his constituents will not take my silence on the matter today as acquiescence in the description that he has given of transport services in Cumberland.

Mr. Campbell-Savours: The hon. and learned Gentleman may be aware that I had to check before rising to speak that this matter was not sub judice. An application has been made to the High Court to set aside the judgment. This matter is very much to do with the Bill because we are discussing the financial arrangements governing the operation of the National Bus Company. The Minister, in the form of the Transport Act 1981, introduced provisions that led to competition with municipal routes and caused a loss of revenue that directly affects my constituents. I hope that if I put down a parliamentary question the hon. and learned Gentleman will give a written and reasoned reply to the points I have made.

Mr. Donald Dewar: I cannot claim to have any great knowledge of bus services in Cumbria. I listened, however, with great care to my hon. Friend the Member for Workington (Mr. Campbell-Savours). I would have thought that, prima facie at least, there is a case for the Minister to answer. I am disappointed that the hon. and learned Gentleman cannot find time in the half hour that he will be allowed to say a few words on the subject. I hope that he will find an early opportunity of commenting on what seems a sad case of the unfortunate by-products that can arise from this Government's legislation.
I do not pretend to be knowledgeable about the details of the Cumbrian situation. I am, to some extent, tonight a refugee from Scotland I am glad, however, to be speaking in this wider debate. The public transport system and its financing is a matter of enormous importance in the part of the country from which I come. The problems of inadequate investment, higher fare structures and falling passenger totals are ones with which I am familiar. They are causing enormous problems in every part of the United Kingdom.
There has been reference to the measure as a split Bill. This creates difficulty when hon. Members are trying to hold a coherent discussion. I should like to say a few words about the ports. I was fascinated by the great certainty with which the hon. Member for Wellingborough (Mr. Fry), who made a brief appearance in the Chamber to make his speech but who has not returned, declared the demise of the port of London. The hon. Gentleman said that it was a corpse that would not go away and objected to pouring money into it. I would have thought that this was, to say

the least, a controversial view and a message of defeatism that would not be endorsed by a large number of people in London and the country as a whole.
I accept that there is a case for help for London and Merseyside. Those ports face a great crisis. The Secretary of State said that they were unique. My view is that they have great problems. To call their problems unique may be over-optimistic. There are a large number of other ports that face similar problems. One has only to look at the situation in Bristol or, if I may be parochial, the Clyde Port Authority. The same storm is gathering force around those ports as we have seen in London and Merseyside.
The Secretary of State outlined criteria justifying the help that he offers. The right hon. Gentleman said that in London and Merseyside there had been a large manpower rundown. In 18 months, the Clyde Port Authority has lost 33 per cent. of its employees, amounting to 600 jobs. The number of registered dockers has fallen from 569 to 382. The second criterion was a dramatic decline in traffic. Here again, the Clyde, like so many ports, has suffered blows. We have lost Manchester Lines with a loss of revenue of £700,000 to the authority. Sea Trains have gone from Greenock with a loss of revenue of £1·7 million. A port that was handling 1·6 million tonnes in 1970 is now down to around 500,000 tonnes. In a decade, the put-through has gone down to almost two thirds. I would count that as a dramatic decline in trade by any standards.
While there is no immediate threat of closure—the third criterion—it is fair to say that the operating profit in 1979 of £2·5 million went down in 1980 to £46,000, a false figure due to £1 million of non-recurring items. In 1981, we face an unambiguous loss of £1 million.
I rehearse these facts, rather in shorthand, as a cautionary tale. The Clyde port—this applies no doubt to ports on other estuaries and in other areas—is vital to the economy of the area. Merely in terms of the dredging operations for the shipbuilding industry, for example, and of the attraction and servicing of industry, it is essential that a port survives on the Clyde. While I make no objection to the help that the Secretary of State is offering to Merseyside and London, I believe that he must face up to the fact that almost inevitably he will be forced very shortly into extending the scheme and this approach on a national basis.
There have been some sneering remarks—and perhaps a shrugging aside—about the possibility of a national ports policy. Whether that comes by ad hoc decisions or by sensible planning in advance and decisions about investment and rationalisation, in any event the Government will be involved in the development of these ports and will not be able to wash their hands of the matter.
I turn to the problems of British Rail and the proposals in the Bill as to its finances. For a very long time we have all been aware that there have been increasing problems in maintaining services and investment in the rail network. Almost a cliché of British politics is a phrase that Sir Peter Parker coined, I think, about the crumbling edge of quality. If anyone takes the trouble to read Sir Peter's evidence to the Select Committee on the Treasury and Civil Service, on 6 July, he will see that that phrase returns and Sir Peter makes the point that if the present course on investment is maintained—the decision is the Government's, not British Rail's, because it is the resources that are made available and the permission to spend which are necessary—that crumbling edge will


become more than a minor embarrassment; it will become a major threat to the viability of the whole railway network.
During the debate many hon. Members have underlined exactly that point very eloquently. When my hon. Friends the Members for Carlisle (Mr. Lewis) and for Keighley (Mr. Cryer) talked about the Ribblehead viaduct, I detected some laughter on the Government Benches—as though a viaduct was some ancient monument of no practical importance. I recognise that it represents a good deal of finance—about £4 million—but it is a very important part of the link between Scotland and England on the West Coast, and it is just one dramatic but important example of the dangers of ignoring the problems involved with having a proper financial basis for the development of our railway network.
If I remember rightly, what Sir Peter said on 6 July to the Select Committee was that if we maintained our present course, if the present rather stingy approach continued, we would see an enormous increase in the number of speed restrictions. He suggested that about 800 miles of track would be subjected to speed restrictions. He suggested that about 3,000 track miles would be under threat during this decade. He specifically suggested—I am again instancing a Scottish worry which is always with us in railway terms—that the West Highland line might be closed within one or two years.
I see that the Under-Secretary is already laughing—as though the West Highland line was a matter of no importance. I recognise that it is a problem, and that it is always on the margin so far as the rail network is concerned. But I want to see the present network of 11,000 miles maintained. If people think that I am raising some sort of bogy and that there is no serious threat to it, they have only to read the speech made by the hon. Member for Wellingborough, who obviously takes great interest in transport matters and presumably has the ear of Ministers. Despite all his special pleading it is clear from what he said that he was prepared not only to contemplate but to advocate very substantial reductions in the rail network on financial grounds. I believe that that would be a great tragedy for all of us.
The Bill will increase the borrowing limits of the British Railways Board. That is fair enough. A written answer today informed the House that the PSO will increase by £110 million. One's first thought is that it means more money for British Rail. However, the Minister must spell out the implications of that increase. My experience is that if the PSO increases but the EFL remains the same, there will not necessarily be increased financial room for extra investment in the British Rail network. If the external financing limit remains static and the PSO takes up a larger share of it, the capital borrowed for investment will be squeezed rather than increased, especially as the external financing limit covers both freight and passenger services. The money that comprises the upper tranche of the EFL has beeen used more and more to cover the freight losses that are so disastrously heavy as a result of the recession manufactured by the Secretary of State and his colleagues.
One cannot assume that if the PSO goes up that will help British Rail's investment problems. It may help British Rail to compensate for declining passenger revenue, which is another inevitable knock-on consequence of the general recession that every British industry is facing, but there is no direct correlation between the measures announced today and an increase in

direct investment that is so badly needed in the British Rail network. We shall wait to hear what the external financing limits of British Rail will be. Unless there is a generous approach to that, the problems to which all hon. Members have referred during the debate will be as great and acute as ever.
I have talked about the possibility of line closures and the protection of the route network. As a Scottish spokesman, I wish to mention the Kilmacolm line. That line, which is near to where I live, will be closed on 1 January 1983. The Scottish Transport Users Consultative Committee unanimously recommended that the line should not close because of the social hardship that would result. That decision had to be taken by the Minister. He has not increased confidence in the future of the rail network by deciding to close it.
Of course, the matter is not so simple. We have often heard the sound of the buck being passed sharply. The Minister is trying to say that if the passenger transport executive in Strathclyde can find extra cash it can keep the line open. That illustrates what I said about British Rail. The passenger transport executive cannot find the cash because of the cash limits and the EFL. It is hopelessly circular and essentially dishonest for the Minister, who must make the decision, to say that he will close the line, implicitly because of some failure by members of the passenger transport executive to get themselves off their backsides and save the line in the period allowed. However, the executive cannot do that because the Minister responsible for them—the Secretary of State for Scotland—will not take a sensible view about what is in the public interest and what the cash limits of the Strathclyde PTE should be.
In the financial year 1981–82, the Strathclyde PTE will pay £22·7 million to British Rail for its section 20 expenses out of a total of £45·2 million received from the region. It is a massive burden and it is the only regional authority in Scotland that pays anything under section 20. The knock-on effect upon its other services is very great.
My hon. Friend the Member for South Ayrshire (Mr. Foulkes) mentioned electrification—I shall deal with that shortly—and specifically the Ayr line. My complaint about that is simple. It is that Ministers have erected a plausible facade that covers a basically dishonest approach. The Government have announced that they will give a 75 per cent. grant towards the upgrading of EMUs that might be used on an electrified line in Ayr. They have said that for the second part of the expenditure on overhead lines, gantries and so on, they will go to Europe and hope to get something like a 30 per cent. grant. The rest of the £18 million that falls under that heading will presumably have to be found by the Strathclyde PTE.
I do not know whether the additionality system would apply and whether that would be added to the EFL of the Strathclyde PTE. In any event, a 75 per cent. grant will be made for rolling stock. There is the suggestion that we may go to Europe for some sort of funding on the other cost. The other £26 million for basic track and signals, which makes up the total of £63 million, will have to be found by British Rail.
From what the Secretary of State said, Strathclyde can now go ahead with the electrification programme. But there is not a hope in hell of Strathclyde getting on with that programme unless something is done about its cash limits and a ceiling placed upon its borrowing requirement. The vital missing ingredient, which makes


the rest a sham and a near-fraud, is the refusal of the Secretary of State for Scotland to do anything to allow Strathclyde to find the money to make up the budget necessary to get the programme under way.
The message we must hammer on every door, particularly the door of Dover House, is that this electrification will give a reasonable return on capital, create jobs and do much to revive the British Rail network in the West of Scotland, which is being stopped because of the spending limits imposed on the Strathclyde PTE.
I recognise that much work has gone into general electrification. I do not pretend to be as expert as some hon. Members about option 3 versus option 5 or the working parties that studied this subject. But I find it disappointing that at a time when the Department of Transport has been involved in extensive studies that have come forward with recommendations, Ministers should start trying to shift their ground and alter the rules that were laid down at the beginning by suggesting that instead of looking at network costs and return on capital, we should do it on a line-by-line, almost a mile-by-mile, basis, thus effectively shelving the matter for a considerable time.
There has been a good deal of comment about the electrification team that is now under sentence of death following the issue of redundancy notices by Balfour Beatty. The hon. Member for Faversham (Mr. Moate) was courageous in his protest and absolutely right. If we are to have a modern railway system, we must move towards electrification. That means that we must preserve the design team and start making progress on the ground. I am disappointed that there Has been so much dragging of feet and that very little has happened over the last few months.
There has been much discussion about morale in the railway industry. My hon. Friends the Members for Carlisle and Ealing, Southall (Mr. Bidwell) both spoke with authority about that. There is no doubt at all that there is a crisis. I know that from talking to people who work in the industry as well as to their representatives. Anyone at British Rail headquarters in Scotland will admit that for a number of years investment has been about 30 per cent. less than was needed merely to maintain standards, let alone to push the threshold forward. Sir Peter Parker, in his evidence to the Select Committee, almost as a throwaway line, said that this year British Rail is eight months behind on normal track renewal. There is no doubt that the crumbling of standards and general disintegration and deterioration will become a major problem unless halted by a courageous Government who recognise what is in the public interest.
The record of the railways and BR employees in the shedding of labour over the past 15 to 20 years is remarkable. It has been done in a spirit of tolerance and goodwill. In Scotland, British Rail has about 17,000 employees, and the number is dropping by about 1,000 a year.
The ordinary employees—not those in the hierarchy or those with a vested interest in causing trouble—are beginning to feel that they are on an endless downhill track. They are making sacrifices, but the public are not being asked to invest in the success of the system. They are told that their sacrifices are essential, but it looks to them as if no one else is prepared to do his bit.
There has been speculation in The Times about a new Beeching-style inquiry, dreamt up by the Central Policy Review Staff, which I sometimes wish had never been dreamt up itself. That is not likely to improve the general atmosphere.
If the Secretary of State is a reasonable man, he will accept that, if there is to be any chance of achieving a successful conclusion to discussions about productivity, open stations, more flexible rosters and the reduction of manning on freight trains, the Government must convince the public about their commitment to the railway system. We are a long way from that.
Let me give one example of the mistaken decisions that have been taken. I refer to an area where, I concede, we are on weak ground in arguing for help for the railways. The lines above Inverness will always be a problem in terms of passenger use, but they are of immense social importance.
On narrow accountancy criteria, those lines are on the verge of dropping off the BR network, but a little investment in them would produce a high rate of return. For example, more efficient level crossings, radio signalling and even, mundane though it sounds, a cheaper and more efficient heating system on the trains would result in admittedly negative, but nevertheless real, savings and a high rate of return on the money that was ploughed in. There are many such examples throughout the railway system, and no sensible Government should pass them by.
The Opposition welcome the Bill as far as it goes. It is a technical measure, necessarily so in many ways; but it begs the big questions, and the difficulty is that we cannot go on begging those questions for much longer. The railway people, commuters and the country generally demand answers, and so far we have had a thin diet of answers.
The Under-Secretary must tell us something more positive about the Government's commitment to a realistic investment policy that will put British Rail on an efficient basis and allow it to do the job that the travelling public demand.
The Government should soon increase the EFL, because the rise in the PSO is not enough and may even be a complication. Something must also be done to ensure that people believe that the network will be protected and that the electrification programme, which is economically so valuable and has a central part to play in our general economic revival and a vital part to play in the revival of the railways, will be tackled with energy and put in hand without any more of the shilly-shallying, prevarication and buck-passing that have characterised Government policy in the past two years.

The Under-Secretary of State for Transport (Mr. Kenneth Clarke): The hon. Member for Glasgow, Garscadden (Mr. Dewar) has made his debut in United Kingdom transport debates. He captured the mood of a substantial part of the debate with his understandable concern about the state of the transport industries at a time of considerable financial difficulty. He went on grossly to overstate his case, using inaccuracies in a way that can only serve to depress those who read these debates outside and who may believe some of his allegations. In their


desire to put forward their case, hon. Members have worked themselves up to a state of excitement, often about matters with little or no factual basis.
In half an hour I cannot answer all the specific transport questions that have been put to me. Tomorrow night there is an Adjournment debate on the Carlisle-Settle line. We know of no proposals to close the Ribblehead viaduct, and there is no question of the Government having refused £4½ million. The diversion of the passenger service which has set off all the fuss was taken on commercial grounds by British Rail and has nothing to do with the physical condition of the viaduct.
The hon. Member for Workington (Mr. Campbell-Savours) expressed understandable concern about the state of village services in his constituency. I shall have to write to him about those bus services. He repeated the case of CMS about the basis on which it cross-subsidises its services. Ministers looked at that case on the evidence put to the traffic commissioner and to the inspector on appeal. The evidence was not sufficient to satisfy us that the granting of the new licence to Yeowart's, which seemed to us a desirable innovation in transport in Cumbria, was the cause of the threat to rural services that the hon. Gentleman described so dramatically.
The hon. Member for Garscadden spoke about the problems of the Glasgow to Kilmacolm line. He accused my right hon. Friend of using near-fraudulent arguments to attribute part of the blame to Strathclyde regional council. But that council withdrew financial support from a line which previously it had supported. In giving reluctant consent to the closure, my right hon. Friend delayed it to 1 January 1983 to give the council time to reconsider its decision. No doubt the other Scottish matters will be taken up by the Secretary of State for Scotland.
We all accept that British Rail faces a difficult financial time. We are in the middle of a recession, and that business is not unique in being affected by it. British Rail's difficulties are not due to any reduction of financial support by the Government. On the contrary, the Government have tended to increase the financial support for the railways. British Rail has suffered sharp drops in revenue on both passenger and freight services, and it has not yet succeeded in reducing its costs.
Nevertheless, despite those financial difficulties, it does no good to dismiss the substantial investment in all parts of the network. It is leading to an improved performance in important parts such as the London and South-East services. Both British Rail and the Government would like a more efficient, better invested modern railway, and whilst there is a long way to go we are moving in the right direction. It is not right to make speeches such as that of the hon. Member for Swansea, East (Mr. Anderson) which became increasingly pessimistic as he surveyed a whole picture of gloom and decay. We have quite a reasonable railway and, as my hon. Friend the Member for Leominster (Mr. Temple-Morris) pointed out, with partnership between railway management and railway unions it should be possible to achieve the future for the railways that we all desire.
The Bill centres on the question of financial support. The right hon. Member for Barrow-in-Furness (Mr. Booth) described the railways as being in a financial straitjacket. He then plunged into detail in an attempt to identify what he thought were the constraints. The detail is something of a maze and it is difficult to secure

agreement on figures. However, in almost all areas the Government have been flexible and have improved financial support to the railways.
The trouble is that the railway is the system that we have and one which we inherited from the Labour Government, and there are a number of controls exercised by the Government over the finances of British Rail. The first is the so-called external financing limit which governs the total amount of grant and borrowing available to the railways from public sources. That has been revalued recently and at the moment stands at £920 million for 1981–82. It has been increased by the Government to take account of British Rail's trading difficulties in the recession. There is no doubt that it is not as high as some people would like. But at a time of serious economic crisis £920 million for one year's EFL is a fairly large proportion of national resources to direct towards the railways.
I move to the grant that subsidises the losses on services that the Government and local government regard as socially desirable and necessary. That is measured by the so-called public service obligation. In response to the question of my hon. Friend the Member for Wellingborough (Mr. Fry), I can say that that is a European Community imposed system whereby the Government lay an obligation on British Rail—it was done in 1974—and pay a certain sum to enable the railways to discharge that obligation.
Only today my right hon. Friend the Secretary of State announced an increase in that grant for this year of £110 million. It is the first time that the grant has been upvalued in the course of a year. The total grant to the railways from central and local government will be £850 million this year. That is more than £2 million a day by way of subsidy going into the railways. Roughly, it means that the present level of subsidy to British Rail to support passenger services costs about £15 each year for every man, woman and child in the country, and that is before anyone has bought a ticket and chosen to make a journey by train. For every 60p that British Rail received in rail fares in 1980, it received 40p in grants from the Government.
On the PSO and the grants and subsidy, British Rail is not being constrained. My right hon. Friend announced only today a substantial increase.
The other control on British Rail is the investment ceiling imposed by the Government. I do not criticise the right hon. Member for Barrow-in-Furness because I have the advantage of substantial advice in finding my way through the maze, but he was confused when he said that the ceiling had been reduced. The Government impose an investment ceiling, and that remains in real terms at the exact level set by the previous Government. We have not reduced it. The figures keep varying as they are updated for each year. My latest figure is £427 million for 1981–82.
The word "ceiling" was used by the right hon. Member for Barrow-in-Furness to describe the spending on investment by British Rail. They were board figures and a board ceiling that he gave. It is true that the board's spending on investment is not at the moment reaching the ceiling imposed on it by the Government. It is investing at a lower level because of the pressures on its external finance limit. But the only way in which that can be looked at is that British Rail is finding it difficult to get up to the level of investment that it would like and up to a level that the Government would allow because the declining business performance of the railways makes it difficult to achieve that within its EFL. It is because of this lost


revenue, the failure to control costs and the level of pay settlements in line with the productivity return that British Rail has difficulty in investing to its ceiling within its EFL.

Mr. Booth: The hon. and learned Gentleman implies that my case is unsound because my figures are wrong. I insist that he says which of my figures is wrong. I quoted separately the ceilings and the actual expenditure. I made it clear that my expenditure figures were based on the average 1981 expenditure adjusted to uniform limits. I was talking about the total expenditure dropping from £475 million at 1981 prices in 1979 to £400 million in 1981. That is the drop in investment expenditure. If we take actual prices rather than constant prices, the board's ceiling in the same period was set at £398 million, and it spent £308 million, but only if one excludes the constant welded rail expenditure. However, one cannot properly exclude that. I ask the Minister to accept that as fair, because the convention was to take that out at the end of 1979.

Mr. Clarke: The right hon. Member for Barrow-in Furness keeps changing his phrases. I am talking about the Government ceiling, which is imposed by the Government as a limit on investment. It remains unchanged in real terms. He uses the phrase "board ceiling", which is not relevant to any Government control. He describes the board's actual expenditure. Plainly, he is not talking about Government controls because, as he says, we took continuous welded line replacement out of our controls and our investment ceiling. The Government's investment ceiling has not been reduced. The reason why the board has not felt able to invest up to that ceiling in recent years is the decline in the business performance of the railways within the EFL, and that is not a Government-imposed restraint.
The investment performance enables the railways to achieve a great deal. Hon. Members have talked about the decay of the railways. The newly elected hon. Member for Croydon, North-West (Mr. Pitt) described the state of the London and South-Eastern services, as did the hon. Member for Swansea, East, who was perhaps less at home with the details of the matter. Nevertheless, when one considers what is going on in the railways within the present levels of spend and within Government controls, one can see that British Rail is bringing the advanced passenger train into service; it has 95 high-speed trains in service; there is a continuous programme of introducing new electric rolling stock on the Southern region; it is spending a large amount on signalling at Victoria, on new signalling on the Brighton line, and on signalling in the West of England. Refurbishment is going on all the time.
It does no service, nor does it improve the morale of the staff of British Rail, to gloss over that and to say that somehow the railways are going to the dogs when, despite the difficulties, the railway management is succeeding in investing and producing substantial improvements in some parts of the service.
Many questions were asked about electrification, which is the key issue now facing British Rail. Many people are anxious that progress should be made in that regard.

Mr. Moate: rose——

Mr. Clarke: I shall not give way, because I have two more industries to cover, and I am still on British Rail.
There was a lot of interest in electrification. There has been absolutely no change in the Government's position from the statement that was made on electrification by my right hon. Friend the Member for Sutton Coldfield (Mr. Fowler) on 22 June. His statement was welcomed at the time as a challenge to the railways. We are now waiting for the railways to put forward the revised business programmes for inter-city and freight, and we are awaiting submissions on particular routes, to show whether they are profitable. Even in transport, involving the kind of figures that I have mentioned, one cannot wave away the idea that investment should be demonstrated to be profitable at a time of great financial difficulty.
We have committed ourselves in principle to a 10-year programme of electrification. Now there is understandable concern about the timing. I can only say that the phrase that was used, that the new programmes and timetable for electrification will be produced by British Rail in weeks rather than months, was a phrase which, to the best of my recollection, was used by the chairman of British Rail, and not by my right hon. Friend the Member for Sutton Coldfield last year. It appears in the Official Report only in the statement given by the rail council, after it had met my right hon. Friend and myself on 22 June. It was with the same disappointment that was felt by British Rail that we heard on 12 October from the chairman that the programme would not be ready before the end of this year. Indeed, some of the programmes for individual schemes will not be ready until the middle of next year.

Mr. Ron Lewis: rose——

Mr. Clarke: I shall not be able to answer the questions that have been put to me if hon. Gentlemen keep asking more questions.
The Hitchin and Huntingdon scheme has been mentioned. Indeed, it appeared recently in the press. We knew that British Rail wished to begin work on that line when the chairman wrote to us on 23 July, asking us to agree in principle to the electrification of that section of the East Coast main line. He did not say at the time that there was any threat to the future of the Balfour Beatty team, although Balfour Beatty got in touch with us and began to alert us. British Rail then raised the question with us again, when we had a meeting with board members on 30 September to consider progress on electrification. We have had exchanges with them ever since. However, we have not yet received the new business plans or a submission on the Hitchin-Huntingdon line in any form other than the letters from the chairman.
It makes no sense to look at that short section of the East Coast main line in isolation from the proposal to electrify the rest——

Mr. Ron Lewis: rose——

Mr. Clarke: We look forward to receiving British Rail's full submission as soon as possible. So far, we have received only letters. I am sure that British Rail will be anxious to come forward with a full submission soon.
We remain committed to electrification. We are also trying to make progress on the Channel tunnel. The hon. Member for Swansea, East and my hon. Friend the Member for Leominster expressed concern about the Channel tunnel's timetable. The Government have aroused interest in the Channel tunnel. We have made it clear that we are interested in propositions and they are


now coming forward from a wide range of contractors and engineers. We are anxious to make progress, to reach an agreement in principle with the French about a desirable form of Channel link.
However, the Government have not dragged their feet. Hon. Members must appreciate that France has a new Government, who are now in discussions with us as a result of the recent Anglo-French summit meeting. The French Government are scrutinising all our proposals for a Channel link in order to try to reach that agreement in principle. We had hoped to reach that agreement before the end of the year, but it is understandable that the French Government should wish to go into such matters in detail. As soon as he can, my right hon. Friend the Secretary of State will make a statement or announcement to the House in the new year.
In that short explanation of the position, I hope that I have made it clear that it is wrong to say—as several hon. Members have insisted—that the Government's relationship with the railways and the unions is all take and no give. We have maintained the investment ceiling and extended the external financing limit. Today, we have raised the public service obligation. We have committed ourselves, in principle, to a 10-year programme of electrification. We have been encouraging about the Channel tunnel and we have also said that some productivity and improvements in performance should be given in return.
I am prepared to acknowledge that British Rail is making reasonable progress towards the productivity improvements that it set. We took the first productivity targets from British Rail's corporation plan, and it cannot be argued that those targets are impossible. British Rail is now well on time with the targets. However, British Rail is in the middle of important and difficult negotiations about productivity improvements, the manning of engines, the rostering of crews and open stations and so on, which flow from the pay settlement. We shall stick to the terms of our electrification agreement and I am sure that British Rail will stick to its terms. In that way, we shall soon achieve the productivity improvements, the business programmes and submissions for particular lines.

Mr. Foulkes: Will the Minister rule out the possibility described in The Times today, that some business man will be brought in? That report casts a great shadow over both workers and management in British Rail. I am sure that all hon. Members will want the Minister to rule out that possibility.

Mr. Clarke: I am grateful to the hon. Member for South Ayrshire (Mr. Foulkes), because he has reminded me that I had failed to answer that point. I read today's report with astonishment. The review of British Rail's finances was first suggested to the Government by British Rail. The chairman of British Rail has agreed with my right hon. Friend about the desirability and need for such a review. The idea that it will be some type of Beeching review is extraordinary. The phrase has crept into today's press stories. However, my right hon. Friend has reiterated the previous Secretary of State's commitment that the Government have no desire to see any substantial cut in the network. We agree with British Rail that there is a need to review British Rail's objectives, the finances to serve those objectives, the way in which the railways are run and their efficiency in achieving those objectives.
I shall turn briefly to the subject of the National. Bus Company. I should hate to give credence to the description given to the National Bus Company by the hon. Member for Liverpool, West Derby (Mr. Ogden). He described it as the poor relation of the nationalised industries. I know that he was not saying that in a critical spirit, and I agree that we often do not pay the National Bus Company the attention it deserves.
The Bill includes a modest increase in the borrowing limits of the National Bus Company. The hon. Member for Workington (Mr. Campbell-Savours) said that the increase was not enough, but it reflects the NBC's decreasing reliance on borrowing and its expectations that it will not need to borrow. For that reason, the increase in the borrowing limits, compared with former levels, is not in line with inflation.
Several hon. Members raised the question of the interest on the capital debt about which many National Bus Company subsidiaries and their managers are anxious and have been pressing hon. Members throughout the country. The National Bus Company would obviously prefer all its interest charges and commencing capital debt written off. No Government have ever felt able to agree to that, because the charges on capital and the cost of servicing the capital are as much a cost of any business as wages, fuel and other operating costs. We could not put NBC at an unfair advantage vis-a-vis its competitors by wiping off all its capital debt at the taxpayers' expense.
Nevertheless, the interest charges, complained about by some subsidiaries, are worth examining. Hon. Members should bear in mind that the charges amount to less than 3 per cent. of the NBC's total turnover. Although there is a campaign about the interest charges, they are not rising. They have been declining in real terms as a charge on the National Bus Company for some time. However, we have agreed to set up a study, with the assistance of Touche Ross, to examine the way in which those interest charges are divided between the different companies.
When looking at the problems of the National Bus Company, which has been given fairly tight financial limits and demanding commercial targets at which to aim, we must not talk ourselves into the belief that the NBC is deprived of support or that the Government are not giving subsidy to desirable services that local authorities and politicians of all parties agree must have some support from public money. The NBC received more than £90 million of public money from the central Government in 1980 in the form of new bus grant, fuel duty rebate and local authority revenue support. A further £20 million was provided by local authorities for concessionary fare schemes. It is not true that we are phasing out the transport supplementary grant. In each year's settlement we accept a given level of revenue support expenditure by each local authority. Unlike some Labour-controlled councils, such as the GLC, West Midlands and Merseyside, we have some regard to the taxpayers' and the ratepayers' ability to pay for the level of support that we accept. I am sure that that commends itself to most taxpayers as a basis for financing bus services.

Mr. Stephen Ross: rose——

Mr. Clarke: I shall not give way to the hon. Gentleman, because he has not been present during the debate. I usually give way to him when I reply to a debate, because he is normally present for the debate. I have only eight minutes to talk about ports.
I shall not spend much time on the usual panacea of the right hon. Member for Barrow-in-Furness that we should have a national ports policy. He was no more successful in explaining to my hon. Friend the Member for Faversham (Mr. Moate) what that meant today than he has been before. It seemed that he was opposed to the Government approving a profitable investment in our flourishing ports, such as Felixstowe and Medway, because he thought that in that way we might reduce the embarrassments at London and Merseyside. I do not accept that.
The right hon. Gentleman should not be so proud of his legacy on the national dock labour scheme. He left behind legislation that implied that that scheme should be extended to large amounts of dock-related work throughout the country. I recall that his proposals then would have made much work subject to the dock labour scheme at Newark-on-Trent, near my constituency, which is rather a long way from the sea. That was not the general tenor of most of the speeches by my hon. Friends with port interests.
I should like to answer the general allegation, which had credence on both sides of the House, that the Bill is somehow a change of stance by the Government from previous Bills. This is the third, as I know only too well. My hon. Friend the Member for Faversham and I have been through them all. The last Bill, which was published in May 1981, was at the time declared to be interim legislation until we had the full corporate plans from the ports and were able to take long-term decisions about their future.
I remind the House of what I said at the stroke of midnight on 14 May 1981 on Third Reading. My words were the last words in the House from the Government on the Bill. I said:
The Government will therefore now be considering whether to continue providing assistance pending receipt of the full plans from the PLA and the Mersey Docks and Harbour Company in the summer. We hope in the summer to be able to make decisions on the longer term future of these two authorities and to be able to chart a clear and early return to profitability. Meanwhile, this Bill provides the means for the ports to continue in business until those long-term decisions can be taken."—[Official Report, 14 May 1981, Vol. 4, c. 996.]
I made it clear in Committee that there would be another Bill this Session once we received the corporate plans and the advice of the accountants and were able to take clear decisions for the future. My right hon. Friend now has the corporate plans and the accountants' advice and the Bill is the result of that information and the Government's commitment to the ports in future.
The basis of the support is not very different from what has existed. Basically, it will cover severance, because there are still surpluses of labour in the docks. Meanwhile, it provides support to cover operating losses to keep the ports open while severances are taking place. There will be provision for essential capital investment.
There was provision in the previous Bill, as there is in this Bill, for essential capital investment. The capital investment that is needed will require the consent of my right hon. Friend. My hon. Friend the Member for Faversham thinks that this might give an unfair advantage to London and Liverpool vis-a-vis the other ports. All support for capital investment, if any be given, will be by way of loan. Precisely the same level of interest will be

charged as that which is chargeable under Harbours Acts loans, which are available to other ports. The bankrupt condition of the London and Liverpool ports means that they would not be able to qualify for Harbours Acts loans without Government support, which they would otherwise receive.
Several hon. Members have referred to severance schemes. No decision has been taken to have a special severance scheme. The underlying problem in both ports continues to be an excess of labour when compared with traffic. There was criticism of the scheme that was operated last year but that scheme was successful in London and Liverpool in bringing both ports back to a healthier condition. It was followed by the recent NAPE voluntary scheme, which was operated throughout the country. That scheme up-valued severance in line with inflation. There was bound to be some up-valuation sooner or later.
Although we were criticised for the way in which we separated the two schemes and the two ports, the recent National Association of Port Employers scheme was successful. Most of the other ports that have been referred to and described as being in difficulties, or potential difficulties, took good advantage of the NAPE scheme last summer. Clyde had a substantial surplus of registered dock workers and was getting into some financial difficulty earlier in the year. The port is not expected to have any surplus registered dock workers following the special NAPE scheme severances.
There is a clear difference between Clyde and London and Liverpool. Clyde has reserves. It is not faced with a threat to cease trading. No ports save London and Liverpool would have to close tomorrow if the Government withdrew support. We are not closing the ports. We are providing the opportunities of further severances and further productivity improvements. In fairness to other ports, we are saying that London and Liverpool must break even on revenue account by the end of 1982. There will be no support for further revenue losses beyond 1982.
I do not accept that that is a draconian or impossible regime to place upon the ports although it might be described as difficult. It is a modest step in returning to viability and it is one on which we hope both ports will be able to improve.
Both ports have been asked by my right hon. Friend to produce action plans to show how they will achieve the targets that my right hon. Friend set for them. In due course we shall provide support up to the ceiling that the Bill will impose upon Government funds.
I shall underline some of the issues that lie behind the reality of all transport debates. Several hon. Members referred to the loss of traffic that the Mersey Docks and Harbour Company has suffered in recent times. The hon. Member for Liverpool, Scotland Exchange (Mr. Parry) knows a great deal about that. The hon. Gentleman listed some of the traffic that has been lost.
My hon. Friend the Member for Southampton, Test (Mr. Hill) detailed some of the damaging effects that Southampton has been experiencing as a result of industrial trouble. The right hon. Member for Barrow-in-Furness seemed to imply that the problem caused by shippers moving their traffic to other ports could be solved if we adopted his national dock policy. That is not so. The movements of traffic represent shippers' decisions to move their traffic in and out of ports that give them the service


that they require. We are a trading country. It is important that our importers and exporters should have the ability to move their goods to where they do best. In the end it is up to those ports to win their traffic by productivity improvements such as those agreed in Merseyside and the sensible move out of the Royals and down to Tilbury that London has achieved. That will determine the future of an overall policy. Meanwhile, the Bill shows sound support for public transport and for the ports. It is based on financial reality. I do not believe that many of the criticisms have faced up to the financial realities.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — Transport (Finance) [Money]

Queen's Recommendation having been signified—

Motion made, and Question proposed,

That, for the purposes of any Act of this Session ("the Act") to increase certain limits relating to the indebtedness of the British Railways Board and the National Bus Company, to the amount of compensation payable in respect of certain public service obligations of the Board, and to the amount of certain financial assistance given to the Port of London Authority and the Mersey Docks and Harbour Company, and to enable the Treasury to guarantee the discharge of the Board's liabilities to the European Company for the Financing of Railroad Rolling Stock, it is expedient to authorise——

(1) any increase in the sums payable under any other enactment out of or into the National Loans Fund or the Consolidated Fund, being an increase attributable to—
(a) any provision of the Act substituting references to £1,100 million and £1,300 million for the references to £600 million and £900 million in section 42(6) of the Transport Act 1968 (which relates to the Board's indebtedness), or
(b) any provision of the Act substituting a reference to £250 million or such greater sum not exceeding £275 million as may be specified by order for the reference to £200 million in section 27 of the 1968 Act (which relates to the National Bus Company's indebtedness);

(2) any increase in the sums payable under any other enactment out of money provided by Parliament or into the Consolidated Fund, being an increase attributable to any provision of the Act substituting a reference to £360 million for the reference to £160 million in section 1(3) of the Ports (Financial Assistance) Act 1981 (which imposes a limit on certain financial assistance to the Port of London Authority and the Mersey Docks and Harbour Company);

(3) the payment out of the Consolidated Fund of any sums required by the Treasury for fulfilling any guarantee of the discharge of the Board's liabilities to the European Company for the Financing of Railroad Rolling Stock, and the payment into that Fund of amounts received by the Treasury by way of repayment of, and interest on, sums required for that purpose.—[Mr. Thompson.]

Mr. Ogden: It is a little unusual for someone who has already spoken in the debate to speak again, but the circumstances are different. On the Government Benches at the moment are a Secretary of State, an Under-Secretary, four Treasury Ministers, a Scottish Minister, a PPS, four Conservative Members of Parliament and a galaxy of supporting talent in the civil servants' box. I think that it is a galaxy of talent; I cannot see them as they are just disembodied heads. Who on the Government Benches would be prepared to answer questions on the money resolution? Is it to be taken for granted that the House will agree to a money resolution without an explanation from a Treasury Minister?

Mr. Kenneth Clarke: The convention that Treasury Ministers answer questions on money resolutions died out some time before I became a Member of the House. It was probably extinct before the hon. Member for Liverpool, West Derby (Mr. Ogden) became a Member. Perhaps he will feel less agitated if I use the extra minute that he has given me to answer his questions.
The hon. Gentleman asked about the funds already being granted under this year's Ports (Financial Assistance) Act. If that is what is troubling him, I can tell him that so far the Port of London Authority has received grants of about £47 million, mostly for severance, plus a guarantee of a commercial loan to the PLA of £25 million. The Mersey Docks and Harbour Company received grants of about £17 million, again mostly for severance. So far no guarantees are extended to Merseyside.

Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. You know as well as I do that the money resolution is restricted. If the Minister proposes to answer questions that arose on the Second Reading debate when we have proceeded to the money resolution, I hope that it will be taken as a precedent. Usually we are precluded from raising matters on the money resolution that we wanted to mention on Second Reading. It is kind of the Minister to reply, but it is not right because it will mean that in future, perhaps on a stronger matter, an hon. Member will be precluded from having the same rights as are now being given.

Mr. Deputy Speaker (Mr. Ernest Armstrong): In this case the money resolution is as wide as the Bill. I hope that the hon. Member for Liverpool, West Derby (Mr. Ogden) will not speak again, I understood that he had finished his speech.

Mr. Clarke: I am on my feet because I am answering points on the money resolution. Perhaps the hon. Member for Liverpool, West Derby——

Mr. Deputy Speaker: Order, Apparently the hon. Member for West Derby gave way to an intervention. The Minister will have an opportunity to reply in a moment.

Mr. Ogden: I was asking what opportunity there would be on the money resolution for questions that should be asked, perhaps by someone else, on the sum of up to £1,000 million. The Minister has said that he would be prepared to answer any questions. He is quick on his feet and in his thinking. He has at least answered one of the questions that he was not able to answer before, Will he declare tonight that for the development of the Celtic Sea Merseyside is to be a preferred port?

Mr. Clarke: If that is the only specific question that I am being asked on the money resolution, the hon. Gentleman has finally put his finger on a question that has nothing to do with the Bill or the money resolution. It is not even my responsibility. I suggest that he addresses his question to my right hon. Friend the Secretary of State for Energy.

Mr. Michael McNair-Wilson: In my speech on Second Reading I asked the Secretary of State to say what the going rate of interest was on money borrowed from the national loans fund. Is my hon. and learned Friend able to answer that?

Mr. Clarke: About 9½ per cent. is the best bet from the distinguished galaxy on the Government Front Bench. I promise to write to my hon. Friend with a specific answer.

Question put and agreed to.

Orders of the Day — London Docklands Development Corporation

The Under-Secretary of State for the Environment (Mr. Giles Shaw): I beg to move.
That the London Docklands Development Corporation (Vesting of Land) (Tower Hamlets London Borough Council) Order 1981, a copy of which was laid before this House on 10th July, in the last Session of Parliament, be approved.

Mr. Deputy Speaker (Mr. Ernest Armstrong): With this we may also take the following motion: That the London Docklands Development Corporation (Vesting of Land) (Greater London Council No. 2) Order 1981, a copy of which was laid before this House on 10th July, in the last Session of Parliament, be approved.

Mr. Shaw: On 1 July, the House approved orders setting up the London Docklands Development Corporation and vesting in it certain lands owned by the Greater London Council and the Port of London Authority. Two further orders were approved by the House on 30 July vesting in the corporation lands owned by the London boroughs of Southwark and Newham. In the debate on those orders I told the House that further orders had been laid affecting some 63 acres of land belonging to Tower Hamlets borough council and some 44 acres owned by the Greater London Council. It is those two orders that we are concerned with today.
The Local Government, Planning and Land Act 1980 enables urban development corporations to acquire land compulsorily and, in the case of publicly owned land, by means of a vesting order subject to affirmative resolution of both Houses. The principal purpose of the latter provision is to enable UDCs to have enough land at the outset for their own early projects and to prepare a range of sites for private development.
The corporation put forward proposals for the early acquisition of some 850 acres of publicly owned land. Orders vesting 278 acres of Port of London Authority land in the West India and Millwall Docks and in Beckton, 15 acres of GLC land on various sites, 142 acres of Southwark land and 87 acres of Newham land, have already been approved. The Corporation is also negotiating for the purchase of land from the British Gas Corporation, British Rail, the Thames Water Authority and the Central Electricity Generating Board.
The Government's case for the orders is that, to be effective, the London Docklands Development Corporation needs to own a substantial amount of vacant or underused land on which it can carry out any necessary preliminary work and then release it for development. That is a key component of its strategy.
Most such sites are in public ownership and several of them are included in the orders before us. Hon. Members may recall that the Government's proposal to set up a development corporation was considered by a Select Committee of another place. That Committee heard evidence and sat for 50 days and produced a unanimous report which endorsed the Government's proposals, with the exception of a proposed change in the boundaries. Although that Committee did not consider the specific proposals for vesting land, it clearly accepted the need to vest land in the corporation.
The two orders before us today were laid on 10 July and were open to petitions for a period of 14 days. One petition, by the Greater London Council, was received against the GLC order. Two petitions were received against the Tower Hamlets order: from Tower Hamlets borough council and the Association of Wapping Organisations—a local community group.
In its petition, the GLC argued that the vesting order would deprive the councill of potential sites for public sector housing, and that the inclusion of various plots would prejudice the implementation of various development proposals envisaged.
Tower Hamlets council argued that the vesting order would deprive it of land which it proposed for public sector housing, that the corporation already had sufficient land for its purposes, that the order would frustrate a civil engineering contract for the reclamation of various parts of the London docks complex and that in any event the order made no provision for indemnifying the council against the obligations arising from that contract.
The Association of Wapping Organisations argued that the vesting order would deprive the local community of new public sector housing, and that community facilities enjoyed on some of the plots proposed for vesting would be taken from them.
In response, the Secretary of State pointed out that the question of the availability of housing land had been considered during the lengthy proceedings on the designation order, that assurances had been given to all three bodies concerning particular points which they raised, and that the development corporation would take over the reclamation contract. Compensation will be paid to Tower Hamlets for any loss suffered as a result of the vesting order, in accordance with the provisions of the compensation code.
The three petitions and the Secretary of State's representations were considered by a Hybrid Instruments Committee sitting in another place. The Committee's report was published and is available to hon. Members in the Library. In it, the Committee took the view that, as far as the land for housing was concerned, that matter had already been sufficiently dealt with by the Select Committee. The Committee also felt that the assurances given by the Secretary of State and the corporation adequately met the remaining points raised by the petitioners and, therefore, that no substantial ground for complaint remained.
The way is therefore open for both orders to be considered by hon. Members tonight. The development corporation has the task of regenerating the whole of docklands, and it is essential to that task that the corporation should have an assortment of sites in all parts of the urban development area as a base from which to pursue its activities. These two orders will finally give the corporation that broad base, and I commend them to the House.

Mr. Gordon Oakes: I thank the Minister for his explanation of the orders. It is clear from what he says that there has been considerable contention about the orders in that the Greater London Council, Tower Hamlets London borough council and a community organisation have been prepared to petition against them in another place. It is well known that the Opposition opposed the concept of the UDC. We opposed it on two grounds. The


first was the question of local democracy and local accountability—something of which we have heard a lot with regard to other Bills that now seem to have disappeared from the purview of the House.
We are concerned that the people of Tower Hamlets and Newham, that the people who elect the Greater London Council and their local councils and that those local councils, as elected, responsible bodies, should have some say in deciding how key land in their areas should be developed. We were also concerned that the urban development corporation, a new concept in Liverpool—I see the hon. Member for Liverpool, Wavertree (Mr. Steen) present—and docklands, which are strictly urban areas, would tend to react as though dealing with a green field site where no one lived, no one had roots and no one belonged. One could get away with that attitude in a new town. One cannot get away with it where there is an established local democracy and an established pattern of living and where people have lived for generation after generation, as in Tower Hamlets.
It would be improper and it is not my intention to refight old battles. We are, however, entitled to examine the order to see how the development corporation is tackling its duties. We were assured by the Minister for Local Government and Environmental Services that there would be enormous co-operation and that the urban development corporation would not attempt to seize all publicly owned land in the area. We were told that it would look at prime sites and that it would examine its needs for the proper planning of the London docklands. We were told in regard to the local council or the Greater London Council, that there would be no attempt to acquire every square yard of land belonging to the council.
These orders give us serious disquiet as to how the UDC goes about its job. It seems to us that the UDC has sought to acquire, under the vesting order, all land in the area which was earmarked for houses with gardens, and all land in the area with housing on the river frontage which was owned by public authorities. They are the keynotes of our disquiet. I shall go into details of particular plots later. Considering Wapping, for example, we find that it is not only all the available land in Wapping that would be available for houses with gardens. That virtually means, as no doubt my right hon. and hon. Friends will say later, all the available land in the whole of Tower Hamlets that is available for houses with gardens.
We must consider whether land and houses with gardens should be the sole preserve of the private sector. Should it not be possible for the local authority and for generations who have lived in Wapping to acquire what most of my constituents in Widnes and most of all our constituents desire—not a high-rise or other flat but a house and garden of their own? I think that that is a perfect entitlement for the people of Wapping and of Tower Hamlets.
On the question of land earmarked on the river frontage—and many of the GLC orders as well as some of the Tower Hamlets orders deal with land on river frontage—the councils concerned have over years planned that these sites should be available for people who live in the borough and who should have the right to live on the river frontage. I shall explain one of our fears. River frontage houses fetch, understandably, a considerable price on the market. Houses on some of the sites that may

have been acquired under these orders will fetch between £100,000 and £250,000. I doubt whether many of the people of Wapping or of Tower Hamlets have the ability to buy houses that cost between £100,000 and £250,000.

Mr. Robert Mellish: Has my right hon. Friend any proof to back what he is saying from the Opposition Front Bench—that it is the intention of the UDC to build houses on the river front for sale at between £150,000 and £200,000? He has said that as though it were a fact. Will he let us know where he got that information from?

Mr. Oakes: I have no proof whatsoever. These orders are coming before the House on an affirmative resolution for approval.

Mr. Ian Mikardo: It is a blank cheque.

Mr. Oakes: It is well known that river front houses sold by private enterprise command very considerable prices. I am very grateful to my right hon. Friend the Member for Bermondsey (Mr. Mellish) for his intervention, because if he or the Minister can say that there is no possibility of that sort of thing happening in regard to these river front sites, and that the people of Wapping and Tower Hamlets can have some of the choice sites on publicly owned land and at rents that they can afford—or, if property is sold, to which I have no objection, at prices that they can afford—I have not the slightest objection. I am certain that my right hon. Friend the Member for Bermondsey will agree that from the Opposition Front Bench I am entitled to ask questions about this matter.

Mr. Anthony Steen: Does the right hon. Gentleman agree that the problem with the docklands in London—it is true of those in Liverpool as well—is that the land has been allowed to deteriorate and that what the UDC, as I understand it, is planning to do is to put in the infrastructure to service that land so that it can be productively used by private enterprise and that, as it is now, it is fairly useless and has been for many years?

Mr. Oakes: If that will regenerate and redevelop London docklands in a way that is fair to its inhabitants, I am in agreement. There is a difference—I must say that from the Front Bench because I know the hon. Gentleman's area as he knows mine—between London docklands and the Merseyside dockland. There is not the same resistance by the local councils in Merseyside. Also, the areas are different. Some people live in the Merseyside area, but not as many as those who live in the middle of the urban development corporation area in the London docklands.
I do not wish to deal with the orders in detail, because many right hon. and hon. Members represent the areas concerned in the vesting orders. They know much more about the local problems and difficulties than I do. However, I wish to question the Minister about the Tower Hamlets order, and especially plot No. 1. That plot is 36 acres of land in Wapping. It was earmarked for local authority public housing with gardens. Again, I come back to my point that people who live in London are entitled to have gardens if they wish. Thirty-six acres of prime land in Wapping is an enormous area, although it may not seem so in a rural sense.
On the Tower Hamlets order, plot No. 6 is the next largest amount of land—about 17 acres. We are talking about a total of 53 acres that was publicly owned and designed for public authority housing with gardens for people who were qualified to live in the area and whose families had lived there for generations. Plots Nos. 3 and 5 mentioned in the same order do not represent the same quantity of land, but they are riverside sites. The local authority petitioned in another place against the order. It planned to allocate public housing on the riverside land to people who lived in the area, who wished a site by the river and who could afford to acquire one.
Will the Minister tell us the intention of the urban development corporation towards those plots? The corporation has the power to build the houses. Will it do so rather than the Tower Hamlets local authority? I would feel some satisfaction if it did. I cannot understand the lack of local democracy in the matter. Will it be possible for those who live in Tower Hamlets to have their homes on such prime site?
Some of the sites were earmarked for ordinary public authority housing. Some sites were designed for housing associations ——

Mr. Mikardo: Two of them.

Mr. Oakes: ——and they have also been swallowed up. Will the urban development corporation work together with the housing associations so that housing association houses can be built? They may do that, but I am entitled to ask for an assurance that the Government and the urban development corporation intend to do so.
The GLC order deals mainly with the Isle of Dogs. Here again we are talking about prime land right on the river front. I refer particularly to plot No. 15, amounting to nine acres; to plot No. 8, which amounts to 11½ acres; and to plot No. 17, amounting to four acres. All three are riverside plots. If the London Docklands Development Corporation viewed those sites with the same mind as a building entrepreneur, it would make a fortune. But what about the rights of the people who live in the area?
On the face of it, the orders give us some cause for concern. The development corporation has acquired almost every square inch of publicly owned land, but we fear that the democratically controlled local authorities in the area, be it the GLC or the Tower Hamlets borough council, have been excluded. We were concerned that the corporation might operate as though docklands was a new town or green field development, and we fear that that might be taking place.
I want to hear what the Minister says before deciding whether to call for a vote on the orders. I hope that what I have said is wrong. I want docklands to do well. I want the area to be developed. I do not want to see the dereliction that now exists. However, I do not want the corporation to do well at the expense of people and their families who have lived there for generations.

Mr. Neil Thorne: I listened to the right hon. Member for Widnes (Mr. Oakes) with interest. I am disappointed with the fact that both the GLC and the borough of Tower Hamlets have opposed the orders.
I am one of the small band of hon. Members who have served on the joint docklands committee. From my own experience, I know how the authorities represented tried

hard to retain both influence and property within their boroughs. They were gravely mistaken. I was disappointed with the lack of progress. The only way in which the London Docklands Development Corporation can properly address itself to its task and overcome years of neglect is to take an overall view.
The right hon. Member for Bermondsey (Mr. Mellish) is our guarantee that this work will be undertaken in a proper and sensible fashion. That was why the right hon. Gentleman was appointed to such an important position on the development corporation. I am quite convinced that no one will be sold a house for £150,000 or £250,000 on the river frontage.

Mr. Mellish: Well said.

Mr. Thorne: Moreover, I should be interested to learn, if such houses now exist, how much the boroughs concerned paid the previous owners. Had there been such houses, I suspect that the authorities would have taken a different view from the one that has now been put forward.
I am disappointed with the fact that the authorities should take such a negative view. I hope that this is not merely a dog-in-the-manger attitude. I was not impressed with the behaviour of their representatives on the joint docklands committee, on which I served for three years. I have every confidence in the present management, and I am certain that it will do a proper job of which we can be proud and on which we can look back with pride in the years to come.

Mr. Peter Shore: The orders concern the ownership and control of about 107 acres of land, all of which, apart from half an acre in Rotherhithe and the Surrey docks, is located in the London borough of Tower Hamlets, and particularly in the constituency that I have the honour to represent.
The land is owned by the London borough of Tower Hamlets and the GLC. The orders will strip them of their ownership and transfer or vest the land in the new Docklands Development Corporation. It is a not insignificant quantity of land and it is concentrated in Wapping, around the old London dock area, and in a substantial part, though not the heart, of the Isle of Dogs.
No one who knows anything of the history of the area, the needs of the people of Tower Hamlets and the plans made and already far advanced to meet them will fail to understand the anger at the orders that is felt by the people of those areas and by Tower Hamlets as a whole.
The borough has had a more difficult and intractable housing problem since the war than any other London borough, perhaps even greater than Bermondsey, though we have been virtually on a par. I think that when my right hon. Friend the Member for Bermondsey (Mr. Mellish) became Minister of Housing in 1964 he put Tower Hamlets at the top of the list. That was the state we were in at the time. The borough now has one of the worst unemployment records in the country as well.
In the past 12 years the movement of the port of London's activities down river towards Tilbury has gradually released large acreages of land, which, as it became available, opened up the prospect of use for the many purposes of the people of Tower Hamlets—new factories, offices, amenities, educational purposes and the housing that the people still urgently need.
With great foresight and at considerable cost and effort, the London borough of Tower Hamlets bought the London dock in 1975 and, through the Wapping plan, laid out, after consultation, a programme for the development of the whole 100 acres involved. Fortunately, part of it has already proceeded to a point where the Government and their agent, the development corporation, can no longer intervene. The area reserved for industrial development was occupied by the vast new premises of International News and by The Daily Telegraph and other job-creating enterprises. For the first time, substantial estates of small houses and gardens have been built in that area of docklands.
I should tell the hon. Member for Liverpool, Wavertree (Mr. Steen), who intervened earlier, that there is no question of this being an abandoned, unused, long-held, rotting area of publicly owned land. The council bought the land in 1975 and proposed its development as part of the docklands strategy in 1976. I adopted all the major parts in 1977, when I was Secretary of State for the Environment, and the go-ahead and the funds were given. The results can be seen on the ground.
The future of a large area of the rest of Wapping and a huge contract for the infrastructure, which went to the Hybrid Instruments Committee in another place, were being debated. Things are moving and the situation is quite different from that which I remember in some parts of the inner dockland in Liverpool.
It is on the use of the remaining land in the London dock area and the land that has recently become available on the Isle of Dogs—some of it has become available only very recently—that the people of Tower Hamlets have pinned their hopes for a transformation in the amenities and circumstances of the area and, indeed, the whole borough.
Those prospects are seriously under threat and for many people they have been cruelly dashed. More than half the 107 acres—a total of 55 acres—is reserved for housing. It will still be reserved for housing but not, I fear, for the people of Tower Hamlets. It will not be for houses to rent. The houses will be offered for sale at prices which I am afraid will be beyond the reach of all but a small minority of the people of my borough.
The enormity of what is being done must be considered against the quantity of land available for housing which will be left to the borough of Tower Hamlets if and when the order is approved. We shall have precisely eight acres left for housing in the borough. I remind the House that in a single plot listed with others in the schedule to the Tower Hamlets order 30 odd acres in Wapping are to be transferred, still for housing, to the London Docklands Development Corporation, and, as we have heard, other land in Wapping to be developed by housing associations and for sheltered flats for the elderly—with riverside views—will be lost to my borough.
My right hon. Friend the Member for Widnes (Mr. Oakes) spoke of a number of prime riverside sites on the Isle of Dogs at London Yard, Caledonian Wharf and Masthouse Terrace.
There are other areas, too. I shall be interested to know what, somehow, can intervene between the market mechanism and the price of those properties, especially the riverside ones. Is any intervention possible in a way that will bring the price remotely within the grasp of the people of my borough?
My right hon. Friend spoke of prices of £100,000 and £150,000, and I know where he got those figures. They are not all that fanciful. There is a thin scree of warehouses in private ownership at the bottom end of Wapping. They have been converted into flats by private people and are on the market. The original conversion price was about £60,000, but they are selling at well over £100,000. How it can be different if private owners are to take over and develop for flats and houses the riverside views on the Isle of Dogs and elsewhere in Wapping and how they can be made available at prices lower than what I anticipate, I do not see, and the onus of proof is upon the advocates of the order who occupy the Government Benches.
The enormity of what is being done can be measured further by the size of the Tower Hamlets waiting list. Eight acres of land in Tower Hamlets will be left, and we have a waiting list of 8,000 families seeking to be rehoused. The prospect of dockland enabled my borough to plan for the future, and it planned for between 1,500 and 2,000 new dwellings in the dockland area which, with the modernisation of existing dwellings, would have enabled it within a measurable period of years to overcome the greater part of our housing need in Tower Hamlets. This transfer of housing land will wreck the housing strategy of my borough and condemn its people to years of prolonged housing shortage.
That is not all, however. Because of its originally dense building and its shortage of building land, Tower Hamlets has been forced almost throughout the post war years to build high-rise flats and not houses. We have a higher proportion of flats and a lower proportion of houses with gardens than any other borough in London. I am not speaking simply of people's preferences, which are overwhelmingly in favour of having houses with gardens. I am speaking of certain categories of need. I have in mind families with disabled children, for whom houses with gardens are often essential. In present circumstances, it is a need which we cannot meet.
The case against the orders was only partially deployed before the Hybrid Instruments Committee in the other place on 21 October. However, I acknowledge that the general case against the Docklands Development Corporation was argued at greater length in the earlier part of the summer. Putting on one side the question of whether we go ahead with the Docklands Development Corporation, I contend that this massive transfer of land, particularly housing land, is not a necessary part of the major purpose of the Docklands Development Corporation. Those purposes can go ahead if the housing land is not so transferred. I contend further that it has clear and obvious disadvantages for the people of Wapping, the Isle of Dogs and Tower Hamlets generally. It is strongly opposed by them. They cannot see—nor is it possible to show them—that their interest lies in this particular transfer of housing land. For those reasons, I join with others in opposing these orders.

Mr. Anthony Steen: I shall confine my comments to what should happen to the land that we seek to vest tonight on the basis that there is a certain relevance between what happens in London docklands and what happens in Liverpool dockland, although I accept that there is a difference between the land in the docks in the two cities.
It is probably less than useful to run round the course and consider Whether the UDC is a good thing or whether the public money would be better used in in-filling vacant sites that already exist in the inner city. A substantial amount of public money has been put aside, and will increasingly be put aside, to revitalise dead areas of the docks in two of the principal urban areas of this country. The importance to the House and to the Labour Party is that this involved massive Government intervention in rundown, depressed areas which have been neglected, although there have been attempts in London, whereas there have been fewer attempts in Liverpool, to revitalise them.
It makes good sense for the urban development corporation to be used to prepare land. Its function must be to use public funds to install services and to make the land attractive for urban development and expansion at the point where private investment will be ready to use it. That, in my view, is the major purpose of the urban development corporation. It should not get involved in building factories and spending money on development. Its sole role, in my opinion, is to market the sites and to sell them and sell the freeholds to those people who are prepared to develop them. It is no good if the corporation just offers leaseholds and short leaseholds to companies which are willing to come into the area, simply because as experience has shown, when local authorities let their property to factories on short leases, the factories are unable to get bank loans to improve the premises and are not prepared to sink large sums of their capital in revitalising ailing factories. One of the cardinal rules for urban development corporations in Merseyside and London is that they should sell off the sites for private development once they have put in the infrastructure.
I want to say something about the London docklands, and about waterfront sites in particular. A unique opportunity will be lost if some of the lands that we seek to vest is not used to establish a small experimental free port. There are free ports in Germany and Eire. They work well, and I understand that the Hamburg free port works particularly well. The EEC may well oppose a further extension of the free port concept. However, there is a strong case for placing a free port in the London docks and another on Merseyside.
The free port is a simple concept that will bring great benefit and prosperity to such an ailing part of London. I think that all hon. Members will agree that the fundamental requirement of city renewal is the attraction of fresh private investment into our declining urban areas. That is the thrust of the Government's enterprise zones, and the partnership, the urban aid and other urban development initiatives. We must also lift unnecessary controls and reduce bureaucracy. Such considerations support the concept of establishing a tax-free port, which—unlike enterprise zones and the urban development corporation—would require virtually no additional public funds and no extra staff on the public payroll.
Such ports would be designated by the Government in areas that have sufficient water front space. There is plenty of water front space at the London docks and on Merseyside. The key point is that there must be sufficient space away from the rest of the port and separated by a fence or wall. For all tax purposes the port would be viewed as being on foreign soil. On Merseyside, a wall already exists round the docks and a small part of that site could be set aside for the free port. A similarly small site

of only 20 or 30 acres could be set aside in the London docks for a similar tax-free port, when the land is vested tonight.
The important factor is that once the goods had been unloaded from ships into the zone they would be free from all Customs entry procedures and would attract no duty or VAT until they had crossed the port's boundaries into the country. The land in the tax-free zone would be foreign soil. While the goods were in the zone they could be processed by factories specially built inside the zone and on the water front site for that purpose. Goods could be manufactured, consolidated, reassembled and shipped out again to other parts of the world and no levy would be raised. Importers could inspect the goods before they came into Britain from the zone. They could discard substandard items and spot shrinkage and evaporation before duty was paid.

Mr. Arthur Lewis: Has the hon. Gentleman checked whether, even if the scheme were good and acceptable, it would be permitted under the Treaty of Rome and EEC regulations? I am glad that my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) is in the Chamber. As we are virtually prevented by the EEC from cooking our own sausages. I doubt whether the EEC will permit us to do such a thing.

Mr. Steen: rose——

Mr. Deputy Speaker (Mr. Bernard Weatherill): The hon. Member for Liverpool, Wavertree (Mr. Steen) must confine his remarks to the use of the land and should not hold a general debate on whether it would be a good idea to have a free port.

Mr. Steen: I have almost concluded that point. However, the land could be used for a particular purpose. Opposition Members have been talking about using it for housing. The right hon. Member for Widnes (Mr. Oakes) devoted most of his speech to housing. I am trying to explain that a tax-free port would be far more appropriate for the site. Nevertheless, Mr. Deputy Speaker, I accept your ruling.
In response to the hon. Member for Newham, North-West (Mr. Lewis), I should say that there are three of four tax-free ports in Europe. Britain should not be at a disadvantage. There is a tax-free port in Shannon and one in Hamburg. The advantages that Hamburg and Shannon have should be extended to London and Liverpool.
There would be obvious advantages in establishing a free port. Factories located in the zones would enjoy advantages similar to those that they would enjoy if they were located abroad. Business men would need to find less money for cash flow, so they could bring in goods and take them out again without having to find capital to pay duty first. There would be less bureaucracy and paperwork.
The attraction of using the land in that way is that the responsibility for policing and general security would be in the hands of a self-financing board of commissioners who would maintain and supervise the security operations of the zone, raising the necessary finance either by way of a general service charge from those doing business in the port or from a percentage payment of goods passing through the zone.
The attraction of private enterprise in the London clocks is well understood by hon. Members on both sides of the House. I welcome the orders and the transference of the


land to the urban development corporation, but it must be used to develop private enterprise and to extend the opportunities by which wealth creation may be returned to this country, to London and to the docks.

Mr. Ian Mikardo: The case against these orders has been marshalled so comprehensively and thoroughly by my right hon. and hon. Friends that I need to add little to what they have said.
I underline the comment of my right hon. Friend the Member for Widnes (Mr. Oakes) that the great mistake that has been made in setting up and giving powers to the London Docklands Development Corporation is to operate it as an analogy to an urban development corporation, which takes a green field site where it is not necessary to carry out exhaustive consultations with the starlings in the air or the earthworms under the ground or which builds up a small village into a city of a quarter of a million people—as is the case with Milton Keynes—and apply the same method to an area that has been densely populated for at least a century and a half.
Of the total area that was originally contained within the joint dockland scheme, the part that is covered by these orders and operated by the London Docklands Development Corporation is about a quarter of the acreage of all the docklands area in the five boroughs. But more than half the population of the docklands area lives on that quarter of the acreage.
The area is along narrow strip of land, a little wider at one end than at the other, and between 25,000 and 30,000 people live there. Although the Isle of Dogs, knocked about badly during the war, has a mainly new community, at the western end of the patch, in Wapping and Shadwell, people have been living there for generation after generation and they have a fierce and intense local patriotism. They are being treated by the Government and by the corporation as though they were not there. The area is being treated as though it were a green field site. No consideration is being given to the principle that the views of those who live in the area should influence the development of the area. The views of those in Tower Hamlets, as my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) has explained so clearly and graphically, are that they need a much greater provision of low-cost housing. Most of them want to rent, but there are others who want to buy. Like my right hon. and hon. Friends, I do not fuss about that, as long as it is housing that is available to those with relatively low incomes in an under-developed area which has suffered many setbacks from the bombing blight of the war to the planning blight of post-war years.
If we were to receive an assurance from the Minister or from the corporation that that is what will be done with the land, we should all be happy. We have had no such assurance so far. There is no sign of any such assurance forthcoming. If it is to do no more with the land than what was planned to be done by the Toynbee housing association, which is doing a marvellous job in another part of the borough, or on a site at Shadwell which was to be developed by the Circle Thirty-Three housing association, or the rest of the area that was to be developed by the borough council, or it wishes to do exactly the same, what is the point of the operation? What is the point

of switching control? What is the point of setting up a new organisation to do precisely what it was intended to do before?
If that question is posed, the only conceivable answer is that the development corporation wishes to use the land differently. If it wanted to do the same, there would be no point in making the proposed changes. The Minister talked about the Government providing great resources. His right hon. Friend the Secretary of State said that on many occasions when I and others have questioned him. Those resources could have been put into the local authority. A large proportion of those resources consists of money that has been filched from the local authority in cuts in rate support grant. If that had been done, the money would have been spent and the developments would have taken place subject to democratic accountability. The public would have been able to have a say in the way in which it was spent, instead of having this Jove-like corporation with Olympian powers. The Attorney-General should not look so puzzled. He knows who Jove was. The corporation will be accountable to no one. It will be remote as it sits on top of Mount Olympus.
Let no one think that it is any substitute for real consultation for the corporation to take one chap from each of the three councils that are affected and to put them on the board. That will not provide real consultation with the local community, whose standard of living and environmental assets will be decided by the corporation.
We have all talked about housing on riverside sites. I do not want £100,000-£150,000 flats, or houses that are valued at even larger sums, such as those that are in that beautiful area at the bottom end of the Isle of Dogs that looks across to Greenwich. I do not want either those or council houses going to the river edge. I want a river walk all the way from Tower Bridge round to the bottom edge of the Isle of Dogs.
However, that costs money, because it means that some land is being taken away, which can be sold at about £250,000 an acre. A local authority does such a thing. If it does not, its electors will kick it in the teeth. I dare anybody to kick the London Docklands Development Corporation in the teeth. It has shown up to now a considerable degree not merely of authoritarianism but of what can be described as contempt for the views of those who live in the area that it administers. It is not even implementing the promises that were made by the Government and the guidelines that were laid down by the Select Committee in the other place.
I am particularly concerned about that and about the attitude of the corporation and its officers towards the public. There was a promise "to involve the public". There was a directive from the Select Committee which stated:
The UDC must win the confidence of local organisations…They must always let the Docklands Forum know what they are thinking of doing.
That is not done. No adequate information has been provided to docklands organisations. When the corporation asks for opinions, it never allows anything like adequate time for people to put together those opinions, mobilise them and pass them over, nor is there the least evidence that when people rush to give a view in the agreed time, it is taken into account. The Select Committee laid down that the corporation should take cognisance of those opinions, but there is no evidence of that at all.
I shall give some examples. I repeat that inadequate information is given about the intentions of the corporation. It has been terribly difficult to obtain lists of planning applications from it. It has been a great battle to obtain them. We have succeeded in getting them for the Joint Docklands Action Group and for the Docklands Forum, but none of the other organisations, for example those represented in the Association of Wapping Organisations, which petitioned against the orders, received any lists of planning applications. Therefore, they do not know what applications are coming forward or what developments are likely to take place.
The corporation will not even publish the dates and the agendas of the meetings of its planning applications committee. It goes to great lengths to ensure that the people in the area do not know what is being planned for them. I repeat that in that it is failing grossly to implement the promises made on its behalf in advance by the Government and the instructions of the Select Committee.

Mr. Arthur Lewis: Does my hon. Friend recall that exactly the same thing happened in that part of London when, without adequate consultation of the local people, the monstrosities of the tower blocks were erected? We know what has happened since. We even have to blow them up because the buildings are falling down. There was lack of discussion and consultation with the people.

Mr. Mikardo: I take that point. But when an elected authority is involved people can make demands on the authority with a sanction behind their demands—the sanction of the ballot box at the next local authority election. The people of Wapping, Shadwell and the Isle of Dogs, and the people in my half of the borough who are on the housing waiting list and are affected by the fact that almost all the land available for housing in the borough is being swiped from it today, have no chance of influencing the development corporation because they have no sanctions and no vote. That is a monstrous violation of the system of democratic accountability that we in this country hold so dear.
I have grave doubts about what will happen. My right hon. Friend the Member for Bermondsey (Mr. Mellish) says that nobody can say what the corporation will do and nobody can prove that it will do anything nasty. He is quite right. But one can put two and two together and draw some conclusions. If its intentions are impeccable, why does it not tell people its intentions? Why does it not disclose more of what it is up to? Why does it not let people know what the planning applications are? If some of us are suspicious, it is the corporation's own fault because it is so tardy in letting people know what it is up to.
The corporation was set up to maximise the private enterprise development element in the area. That is what was said when it was set up. It operates under a chairman who, according to his autobiography, was one of the toughest, most ruthless private developers of expensive property that there have ever been. I am not doing him an injustice in saying that, as I am merely repeating what he has written about himself. It would therefore be very surprising indeed—I should be very happy, but I should certainly be very surprised—if the corporation then used the land to provide housing for the people of Tower Hamlets at prices they could afford.
It is because I believe that is not what will happen that I shall certainly vote against the orders today.

Mr. Deputy Speaker: Order. I remind the House that it agreed earlier to take both orders together. The debate will therefore end at 11.35 pm.

Mr. James Wellbeloved: On a point of order, Mr. Deputy Speaker. When that proposition was put to the House and we indicated by not commenting that we had no objection, there was no thought at that time of the vast interest that would be generated by this debate. I wonder, therefore, whether it is possible for the orders to be taken separately. It is a matter of considerable importance. The proposition was to take the orders together if it was for the convenience of the House. I believe that it would be for the convenience of the House if they were taken separately to allow this very important issue to be thoroughly examined.

Mr. Deputy Speaker: Order. I am sorry to have to tell the hon. Gentleman that that is not possible. Mr. Speaker has previously ruled on that. I think, with respect, that the problem is the length of the speeches.

Mr. Christopher Murphy: It is a great pleasure to follow the hon. Member for Bethnal Green and Bow (Mr. Mikardo) as it is in consequence of our having been political opponents in two general elections that I can claim a certain valuable knowledge of that part of the East End.
The House should recognise that in Tower Hamlets there has been an appalling history of the destruction of Regency and other older homes, many of which were originally in private ownership. Rather than improve them, the Socialist council replaced them with public sector tower blocks which did little to improve either the quality or the quantity of housing stock.
It seems to me that the intervention of the new urban development corporation would provide the opportunity for choice in housing that has been sadly lacking in this part of the East End of London. The clear imbalance that exists in Tower Hamlets between private and public housing has been a key problem in this unfortunate and somewhat wasted area.
Tower Hamlets has been renowned for two things for too long—the incredible areas of unused land surrounded by corrugated iron that strike anyone travelling through that part of the East End and the aforementioned tower blocks that have given rise to the description of the London borough of Tower Hamlets as "the London borough of tower blocks". Many of my constituents, who are former constituents of the hon. Member for Bethnal Green and Bow, have had to move to the green field areas of Hertfordshire because of the lack of suitable housing that is open to them in that part of the East End.
It is, therefore, in the interests of the people of Tower Hamlets that the urban development corporation should be given the opportunity to redevelop these wasted areas and give the people in that part of London the choice of housing that they so sadly need.

Mr. Robert Mellish: As this debate is concerned with what the development corporation has done, what it has not done and what it should do, and as I am its vice-chairman, I hope that I shall be allowed some time to explain what it has done and what it hopes to do. I do not think that it is the Minister's responsibility to


defend what we have done or what he have not done. It is for those who like myself have accepted the job to stand up and be counted.
I agree with my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) that Tower Hamlets, which I have known all my life, although not quite so well as Bermondsey, is a borough that was affected by the worst kind of housing problems of any borough in the country. The borough has faced those problems with courage and bravery. Over the years, it has done a job that I have understood and respected. If it has made mistakes the same applies to every borough council in Britain. However, when one considers the area's immense problems and also the devastation of the war, I have nothing but praise for what the borough has attempted. It is unfair to comment on what one sees on the perimeter of Tower Hamlets. One needs to see some of the better housing within the borough.
An obvious fact, missed throughout the debate, is that opposition to the establishment of the London Docklands Development Corporation means that nothing happened until the end of July. We were made legal on or about that time. There followed the beautiful month of August when, as everyone knows, hon. Members and borough councils work like mad. So there was a hiatus. Our first action was to appoint staff. We had appointed a general manager designate. We had then to appoint a chief planner, a chief development officer, a chief financial man and a whole range of chief officers while bearing in mind that this House and the whole of docklands would resent any idea that we had built up a huge empire that was uncontrollable.
I am not making excuses. I am simply stating the facts of life. It was September when we started getting these officers into place. For one post alone, there were 1,500 applications. It takes time to open envelopes, sort out the candidates and arrange interviews. As soon as officers were appointed, we tried hard to get things moving. I was appointed—this will not surprise hon. Members—as chairman of the committee that would deal with housing. I have already signed contracts for 600 houses in the Newham part of docklands and recently signed a contract for another 600 in my own constituency of Bermondsey, making a total of 1,200 houses. The contracts have been signed and will be started before 31 March. I hope that they will be completed before the end of 1982.
I shall be asked what sort of houses will be provided. Hon. Members have every right to ask what is planned. I have always maintained that the development corporation should be judged on what it does. It is right that we should prove to hon. Members and to docklands people that the right decision was made when we were appointed, so I just throw up the first thing that comes to mind, which is the fact that I have signed contracts for 1,200 houses. I hope to go to Tower Hamlets to be involved in the signing of more contracts for new homes, all to be completed as quickly and as efficiently as possible.
I want to make it abundantly clear that every house with which I am associated—past and present—has been in the price range of £18,000 to £25,000. That makes a mockery of the figure of £150,000 that was thrown up from the Opposition Front Bench, as though I were the type of

person, or the board were the type of board, that would look for characters with that sort of money to spend. That is not in my orbit at all.
This is what we have done, so let us be judged on that and on what we are doing.
My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) made a very important point about consultation, and rightly so. I shall explain that matter to him and what I intend to do. We have started building the sort of houses that ordinary people can afford. I say that without offence. I talk about it in my constituency. In dealing with its problem, Tower Hamlets had to go—as did Southwark in dealing with its problem—for massive redevelopment by the local authority. No one quarrels with that. The removal of acres and acres of slums alone could be done only by a local authority. In the place of the slums, various kinds of flats were erected.
We all have tower blocks in our constituencies. I take my share of the responsibility for those, as much as anyone in the House, because I was the Minister when we continued the previous Government's policy of building high. In those days we believed that that was the right policy. That was wrong. Looking back, I wish that we had never built any tower blocks. I wish that we had never got involved in industrial building, but that is another argument.
It is easy to say that now. When people first went into the tower blocks, they were a heaven upon earth. With one particular lot of buildings, Queen's Buildings, five families shared one toilet and one tap. They were put into a tower block and they thought it was heaven. It was fabulous. But now, a few years later, it is not heaven. It is lousy; it is hell. That is especially so for people with children. I suppose that this is because of the progress of living standards. No borough council, even in its wildest dreams, would ever go for that policy again.
However, as a result of that policy of clearing the slums, and so on, about 86 per cent. of the entire accommodation in Tower Hamlets is rented. It is owned by the borough council. In my constituency the figure is about 82 per cent. I propose to make an injection here by building homes at a price range of £18,000 for a one-bedroom flat to £25,000 for a three-bedroom flat. I shall be giving people in those areas the chance to buy for the first time.
Perhaps it will be shown that this is wrong and that I should not have done it; I do not know. But I have a strong feeling that I shall be killed in the crush. When my local authority experimented with about 20 houses, overnight it had 600 applications to buy. The irony of the case being advanced by some of my hon. Friends is that they talk in terms of putting up council flats. Let us forget my argument about accommodation for rental and building for sale, and so on, and let us just take the council's case. My local authority has just done this. It has built houses where I come from. They are very nice houses. But the rents are £42 a week. That is to rent a house from the borough council. When my hon. Friends say that people want to rent property because they cannot possibly afford to buy, I must say to them, with great respect, that £42 a week is a hell of a lot of money. It is a hell of a lot of money for a place that will never belong to the tenant anyway.

Mr. Nigel Spearing: My right hon. Friend has tonight announced that he has signed some contracts for new private housing in my constituency. Will


he take it from me that not only has the borough council provided homes for sale in Newham previously but that the information regarding the activities of the UDC is inadequate? Will he please look at this matter? The information that he is giving to the House tonight has not been officially transmitted either to myself or, as far as I know, to the public in the area, and the present situation is no good.

Mr. Mellish: I was at Newham a week ago, when I met the council officers and the Mayor. I am sorry that my hon. Friend was not there, but I have nothing to do with those who attend meetings arranged by the borough council.

Mr. Spearing: I mentioned the UDC.

Mr. Mellish: I took four members of the UDC with me, including three senior officers.
My right hon. Friend the Member for Stepney and Poplar raised an important point that should be answered tonight. What are we doing to inform the local community? It would be appalling if we went to those areas with a sense of arrogance and decided that we were going to do certain things without telling anyone locally. We have tried very hard to devise a fair and honourable scheme, but we have some difficulties. I do not know if my hon. Friend Knows the number of community groups that wish to be consulted. There is not just one—there are dozens. That was the heartache with the Docklands Joint Committee. Nothing could be fairer than the principle and democratic right of consultation with those people, but one cannot spend one 's life discussing with groups. One must do something, if it is only to say "Goodbye".
We must set up an organisation, which I call the "Docklands forum". We must pay for it and its staff, separate it from the urban development corporation, give it its own offices and make sure that it has complete independence. We inform the forum of everything, such as details of planning, and let it transmit the information to the various groups about which they will know. That is the only way in which I can see the plan working.
That does not mean that I and other members of the board should not receive representations from groups—such as the Wapping association—where it is justified. That type of group is not on the list that I talked about. We have heartaches and problems. My hon. Friend the Member for Newham, South (Mr. Spearing) said that we have not told anybody anything. We started only in September, apart from my dashing around to get housing projects started. We are trying to build up a strategy plan and sell all the areas to private enterprise, for housing and infrastructural development.
I have already taken up too much time, and others wish to speak. We must set up a consultation system. This speech will be read by my critics next year, by which time I sincerely believe that we shall have not less than 2,500 houses under construction in London's dockland area and not less than about £800 million of commercial work. Judge us on merit. We must bring the area to life. It has been derelict for so long—I have seen the process of dereliction—that whatever we do must be a success.

Mr. James Wellbeloved: The House is fortunate that the right hon. Member for Bermondsey (Mr. Mellish), despite the fact that he is vice-chairman of the corporation, is still a Member of the

House. Although I have perhaps a vested interest in his concentrating on his vice-chairmanship and thus giving an opportunity for one of my colleagues to take his place as Member for Bermondsey, it would be in the interests of Parliament if he would continue for a little longer and bring to bear his knowledge and activities in debates on the docklands.
The plots of land that are being vested in the corporation have ramifications that go far beyond Tower Hamlets and the other boroughs. While I do not wish to detract from what has been said by hon. Members who have spoken about Tower Hamlets, the use of the land, especially those parcels contained in the GLC order—which I understand will form part of the enterprise zone in the area—has a wide impact on the surrounding area. I have received many representations from industrialists in my constituency who are worried about the use of the land and the development of an enterprise zone.

Mr. Mellish: I hope that the Minister will confirm later that what we are discussing has nothing to do with enterprise zone land.

Mr. Wellbeloved: I am advised that a small parcel of the land is in an enterprise zone. That is why I believed that I was in order to mention the matter. The enterprise zone is not the responsibility of the corporation, but. the Minister has a responsibility to re-examine the propriety of having an enterprise zone in the development area because it will have such a devastating effect on the industry in the surrounding boroughs.
I suffered grave discourtesy from Lord Bellwin, the Under-Secretary of State. He did not have the courtesy to reply to my letter but merely sent me a duplicated copy of a letter to another hon. Member. I hope that the Under-Secretary who is to reply will convey my displeasure, and that of the House, at such discourtesy.
I am delighted that the land is being taken away from the GLC. I do not make a party point because, whether Labour or Conservative is in control of the GLC, the development that it is doing in Thamesmead is a disgrace. It has suffered delay after delay. If the GLC had been left to do the development in dockland I doubt whether it would have taken place. I support the order on that ground alone.
I agree with the right hon. Member for Stepney and Poplar (Mr. Shore) about the river walk. It is an important item. I hope that the corporation will preserve a river walk through the area.
The right hon. Member for Bermondsey referred to £42 a week being charged for rent and rates in Tower Hamlets. The GLC is charging well over £50 for rent and rates for accommodation in Thamesmead. That is a scandal. I hope that the right hon. Gentleman and his corporation will succeed in selling the property to people who are suffering from the scandal of local authorities charging excessive rents and imposing high rates so that they may escape and enjoy benefits similar to those of owner-occupiers in the development corporation area.

Mr. Giles Shaw: With the leave of the House, Mr. Deputy Speaker, I shall comment briefly on the points raised in the debate.
I wish to correct an impression that the vesting of land by the corporation is a huge undertaking in relation to the


land mass involved. I remind the House that the total for which the corporation is responsible is 5,100 acres. Its intention is to vest 523 acres and, if the House agrees, a further 107 acres, making a total of 630 acres. That is the total amount of land which the corporation intends to vest.
I also remind the House of the supreme problem that the corporation must face. It is a question not just of revitalising land for productive uses but of trying to recreate within a vast and important area of the East End a whole new economy. It is achieving in the initial stages the vesting of land for housing development, open space, environmental improvement and riverside walks. Its intention is to produce a substantial amount of riverside walk. But its primary purpose is to generate sufficient development of industrial and domestic provision so that the community can live again. I remind the House that the corporation has been in operation for barely four months. It is therefore incumbent on us to recognise that we are discussing the very early stages of what is hoped will be its successful and profitable development.
The right hon. Member for Stepney and Poplar (Mr. Shore) was concerned about the provision of housing in Tower Hamlets. I reiterate that the corporation has reached agreement with the borough of Tower Hamlets that it will give due consideration to those on the waiting list in that borough for the housing that it hopes to provide. The right hon. Gentleman knows that the chairmen of the borough councils of Tower Hamlets, Southwark and Newham have agreed to become members of the board. I suggest to the right hon. Gentleman that it is important to ensure that the housing policies pursued by the LDDC bear a proper relationship to the needs of the area and the aspirations of the community. I think that most hon. Members on both sides of the House would welcome that development.
The hon. Member for Bethnal Green and Bow (Mr. Mikardo) referred to the problems associated with the contract in Wapping. I assure him that the LDDC is taking on that contract. It is hoped that agreement will be reached between the contractors and the corporation on the maintenance of the contract.
I assure the right hon. Member for Stepney and Poplar that, in so far as the borough of Tower Hamlets and the LDDC wish to negotiate compensation, the requirements will be met in accordance with the public principles laid down for compensation in these matters. I wish to reassure the right hon. Gentleman that there is no intention by the LDDC of selling the borough of Tower Hamlets short either on the housing policies that it pursues or on the handling of the land for which originally the borough was responsible.
Reference has been made to the developments at Beckton in the area represented by the hon. Member for Newham, South (Mr. Spearing). Some 600 houses are to be built there at an average price of £25,000. I recognise the feeling of hon. Members that the housing policies of the LDDC—I remind the House that the LDDC is not a direct housing authority; it is seeking to sell land for the development of housing—should provide mixed pricing and ownership. The role of housing associations, of low-priced ownership and of shared ownership is part of the plan. Therefore, there is no question of housing land being developed purely for the kind of speculative development that the hon. Member for Bethnal Green and Bow, as is his wont, would seek to try to frighten the House about at

this time of night. If there is any Olympian prospect, it is that the hon. Gentleman, who has noted the appalling failures of the housing policies pursued in that borough, should now find himself in a vindictive mood against the new policies being pursued by a corporation that is seeking to rescue much of the Isle of Dogs from the desecration of the previous incumbent.
I suggest to my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen) that we cannot be involved in an argument about free ports. We have established an enterprise zone within the Isle of Dogs. I am sure that all hon. Members agree that it is sensible to try to get new commercial and industrial development, but that to get involved in free ports is not on.
I welcome the points made by my hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) about the sheer scale of the problem. It is vital to keep that in our minds.
The right hon. Member for Bermondsey (Mr. Mellish), who has by far the greatest knowledge of this matter as regards the development corporation, was right to say that rooting in the community is being sought. Consultation, availability for discussion, discussion with the boroughs and agreement that the borough leaders are now involved in the corporation are the ways in which we should seek to move forward in what is undoubtedly the biggest challenge that the capital has seen for four or five generations.
I commend the order for approval by the House.

Question put:—

The House divided: Ayes 90, Noes 18.

Division No. 11]
[11.35 pm


AYES


Alexander, Richard
Jopling, Rt Hon Michael


Ancram, Michael
Knight, Mrs Jill


Bendall, Vivian
Lang, Ian


Benyon, Thomas (A'don)
Lee, John


Bevan, David Gilroy
Lester, Jim (Beeston)


Boscawen, Hon Robert
Lloyd, Peter (Fareham)


Bottomley, Peter (W'wich W)
Lyell, Nicholas


Bright, Graham
MacGregor, John


Brinton, Tim
McNair-Wilson, M.(N'bury)


Brooke, Hon Peter
Major, John


Browne, John (Winchester)
Mates, Michael


Budgen, Nick
Mellish, Rt Hon Robert


Cadbury, Jocelyn
Meyer, Sir Anthony


Carlisle, John (Luton West)
Mills, Iain (Meriden)


Carlisle, Kenneth (Lincoln)
Moate, Roger


Chapman, Sydney
Murphy, Christopher


Clarke, Kenneth (Rushcliffe)
Myles, David


Cope, John
Neale, Gerrard


Costain, Sir Albert
Nelson, Anthony


Cranborne, Viscount
Neubert, Michael


Dorrell, Stephen
Newton, Tony


Douglas-Hamilton, Lord J.
Normanton, Tom


Dover, Denshore
Onslow, Cranley


Durant, Tony
Osborn, John


Eggar, Tim
Page, John (Harrow, West)


Elliott, Sir William
Page, Richard (SW Herts)


Fairgrieve, Sir Russell
Parris, Matthew


Faith, Mrs Sheila
Pollock, Alexander


Fenner, Mrs Peggy
Proctor, K. Harvey


Forman, Nigel
Raison, Timothy 

Fox, Marcus
Rhodes James, Robert


Gardiner, George (Reigate)
Roberts, M. (Cardiff NW)


Garel-Jones, Tristan
Sainsbury, Hon Timothy


Goodhew, Victor
Shaw, Giles (Pudsey)


Gow, Ian
Shaw, Michael (Scarborough)


Gower, Sir Raymond
Shelton, William (Streatham)


Hamilton, Hon A.
Speller, Tony


Hawkins, Paul
Spicer, Michael (S Worcs)


Hawksley, Warren
Steen, Anthony


Hicks, Robert
Stevens, Martin






Stradling, Thomas, J.
Watson, John


Thompson, Donald
Wellbeloved, James


Thorne, Neil (Ilford South)
Wheeler, John


Trippier, David



van Straubenzee, Sir W.
Tellers for the Ayes:


Waddington, David
Mr. Selwyn Gummer and Mr. Alastair Goodlad.


Waller, Gary





NOES


Campbell-Savours, Dale
Mikardo, Ian


Canavan, Dennis
Parry, Robert


Davis, T. (B'ham, Stechf'd)
Powell, Raymond (Ogmore)


Dean, Joseph (Leeds West)
Robertson, George


Dixon, Donald
Shore, Rt Hon Peter


Flannery, Martin
Skinner, Dennis


George, Bruce
Spearing, Nigel


Hooley, Frank



Leighton, Ronald
Tellers for the Noes: Miss Jo


Lewis, Arthur (N'ham NW)
Richardson and Mr. Bob Cryer.


Mc Taggart, Robert

Question accordingly agreed to.

Resolved,
That the London Docklands Development Corporation (Vesting of Land) (Tower Hamlets London Borough Council) Order 1981, a copy of which was laid before this House on 10th July, in the last Session of Parliament, be approved.

Resolved,
That the London Docklands Development Corporation (Vesting of Land) (Greater London Council No. 2) Order 1981, a copy of which was laid before this House on 10th July, in the last Session of Parliament, be approved. —Mr. Giles Shaw.]

MEMBERS' SALARIES

Ordered,
That the Minutes of Evidence taken before the Select Committee on Members' Salaries in the last Session of Parliament and not reported to the House, together with Memoranda laid before them, be referred to the Select Committee on Members' Salaries.—[Mr. Brooke.]

Orders of the Day — LD50 Toxicity Test

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Brooke.]

Mr. Frank Hooley: The LD50 toxicity test is a method of trying to determine how poisonous a chemical or pharmaceutical substance is by forcibly feeding it to live animals and then determining what single dose is required to kill 50 per cent. of them within a maximum 14-day period, hence the expression "lethal dose 50", or LD50. The technique generally used is to push a tube down the throat of the animal and then feed it with the substance, or the chemical may be applied to its skin or, in some cases, a vapour may be used which the animal is forced to breathe.
An official report to the Home Office in 1979 by the advisory committee on the administration of the Cruelty to Animals Act 1876 said rather baldly in paragraph 13:
LD50s must cause appreciable pain to the animals subjected to them.
It would be a good deal more accurate to say that they cause agonising pain, convulsions, bleeding, diarrhoea, and eventually lingering death over a number of days.
The number of animals used is not insignificant. In 1980, it was 484,849, according to official statistics. The test was devised by a Dr. J. W. Trevan in 1927, more than 50 years ago, to measure the strength of highly poisonous but potentially beneficial drugs such as diphtheria antitoxin, digitalis and insulin. Unfortunately, its use has been extended to determine the acute toxicity—in normal speech, poisonous potential—of industrial chemicals, natural compounds, food additives, pesticides, detergents and even substances used in cosmetics. The LD50 test was developed originally for drugs. It has now been taken over for the toxicological evaluation of all other classes of substances, hence the use of nearly 500,000 animals for this purpose in 1980. Mice, rats, birds, fish, rabbits and guinea pigs are used mostly, but sometimes dogs and, very rarely, monkeys.
Unfortunately, its use has been built into the law. In the United Kingdom regulations under the Medicines Act 1968 and the Health and Safety at Work etc. Act 1974 refer to it specifically. An EEC directive is being considered to harmonise practice in the Common Market, and many other countries have similar legislation. The consequence is that the test is widely employed not because it gives useful results scientifically but to satisfy legal requirements in marketing products within the United Kingdom and in export markets.
If a manufacturer produces a substance which subsequently causes damage or harm to a person and that person sues the manufacturer, he can argue in his defence that the LD50 test was carried out according to the rules and thereby seek to satisfy the court that he did nothing wrong in marketing the product.
However, the test has serious defects. The results can vary drastically according to the species of animal used. One compound administered according to the LD50 procedure to male mice produced a slightly toxic effect. Given to male rats, for the same purpose, it qualified as highly poisonous and therefore subject to strict controls. This example is quoted in an article published this year—I stress this year, 1981—by G. Zbinden of the Institute of


Toxicology in the Swiss Federal Institute of Technology and University of Zurich, an institution of international reputation in scientific matters.
The same article draws attention to variations in results from the tests according to the sex, age, diet, genetic strain, health, degree of starvation, and method of dosing of the animals used. The temperature and humidity of the laboratory, the type of cage, and even the bedding material of the animal could affect the results. There are also seasonal variations.
A special international study was undertaken in the late 1970s of the variability of the LD50 test, covering 100 laboratories in 13 countries. By the end of 1979 information from 80 laboratories became available. Despite careful control of experimental conditions—caging, feeding, weight and age of the animals used—the results for the five substances in this control test showed marked discrepancies as between different laboratories.
More fundamental is the objection that species difference—different types of animals reacting differently to the same chemical—is a major obstacle to the extrapolation of results from animals to man. I shall quote what Professor Zbinden said in his article:
Unfortunately, even with carefully designed animal experiments it is sometimes not possible to predict all relevant symptoms of an acute intoxication in man. Human response to chemical substances is often quite peculiar, and valid experimental model systems to assess these reactions are lacking. For this reason, it is very important to intensify research which will permit us to expand the range of toxicological knowledge and to improve the predictability of the test procedures. Governments and industry would be well advised if part of the funds now spent for routine investigations would be allocated to the study of better testing methods.
We should recognise that in the half-century which has elapsed since this test was devised, a revolution has occurred in the biological sciences, and alternative techniques could and should be developed. A single-cell culture system can give a rough guide to the human lethal dose of a substance, if that substance acts by damaging the cell function. This would filter out the more poisonous chemicals and drugs, which could then be discarded without further testing and without poisoning unnecessarily thousands of animals.
Some work carried out in Sweden has shown that a simple cellular system derived from human cancer of the cervix can be very useful. The system is based on a metabolic inhibition test supplemented by microscopy. For 39 out of 52 drugs, dosages toxic to the cell were grossly similar to the estimated human lethal doses. The advantage of cellular systems such as those used in Sweden is that they are controlled and, of course, are much cheaper. That is one reason why the Swedish work was initiated.
The greater complexity of living animals—there is a difference between testing on cells and testing on live animals—is of no value when based on fundamental and unalterable differences between the species. In other words, one cannot simply extrapolate from animal to man. Increased demand for testing by regulatory bodies has spurred the investigation of these cheaper non-animal tests, but continued reliance on the animal method has delayed the development of new and more effective procedures.
It is possible to get a more sophisticated assessment by using tissues from various organs such as the liver, nervous tissue, muscle cells or the thyroid gland. One of the advantages of tissue culture is that human cells can be employed to reduce the problem of species difference between animals and humans. I shall quote briefly from the article by Professor Zbinden:
For the recognition of the symptomatology of acute poisoning in man and for the determination of the human lethal dose the LD50 test in animals is of very little value. Much more relevant information could be gained from a well conducted comprehensive short term test which includes clinical and biochemical monitoring and gross and microscopic pathology. Such a test could be done with small numbers of animals … The use of the LD50 test as basis for selection of doses for sub-acute and chronic toxicity tests and other procedures … is obsolete".
These alternative techniques can be supplemented by theoretical studies of new chemicals which belong to classes of substances whose mechanism of poisoning is already well known. However, if more humane and more satisfactory techniques are to be developed, both Governments and industry must allocate more funds to investigate better testing methods. Of course, there would have to be some change in the regulations under the Medicines Act 1968 and the Health and Safety at Work etc. Act 1974. Special responsibility must rest on the Government, and particularly on the Home Office, to change that legislation.
First, the LD50 test is obsolete. I have already cited the evidence from the special study made in Zurich, which categorically reaches that conclusion. Secondly, it is now widely used for purposes for which it was not originally designed. It was developed in 1927—more than 50 years ago—for testing the poisonous nature of special substances that were, and no doubt still are, of enormous importance as potential medicines. Substances such as digitalis and insulin are extremely important. It was not designed as an all-purpose test for industrial chemicals or for the compounds that are found in detergents, cosmetics, and pesticides, although over the years it has been steadily extended to them. Thirdly, it produces results that are scientifically unreliable and cannot be extrapolated from animals to humans. Again, I cite the findings of the Zurich paper, which are specific and important. Fourthly, it causes agonising pain and death to nearly ½ million experimental animals each year in this country alone. All hon. Members will agree that we should avoid that if possible and if there are other options.
Fifthly, the main use of the test now is to satisfy legal—not scientific—requirements. It does not have a sound scientific base. The regulations under the various Acts have incorporated the test as a requirement and, as a result, it is being widely used for legalistic rather than truly scientific purposes. Sixthly, there are other, supplementary techniques that could drastically reduce both the number and type of animals used and might ultimately eliminate their use altogether.
I am aware that cruelty to animals is an emotive subject. All civilised people are anxious to make arrangements that prevent or limit it. I am equally aware that there are powerful schools of thought that claim that the experiments made on animals are necessary either for the advancement of science or to ensure the safety of substances that are widely used both in medicine and for various industrial purposes.
I emphasise—I am sure that no one can dispute it—that in the past 10 or 15 years we have had a biological revolution. It is now possible for scientists and biologists to manipulate the fundamental structure of life. We can disentangle the genetic code that determines the nature of living things. The advances in that direction have been enormous. I do not believe that it would be impossible to develop and use similar techniques so as to avoid inflicting violent pain on hundreds of thousands of animals every year. Perhaps we cannot eliminate the LD50 toxicity test altogether, but I am convinced that we could go a long way towards it, and that Government action is now required to set out on that road.

The Minister of State, Home Office (Mr. Timothy Raison): The hon. Member for Sheffield, Heeley (Mr. Hooley) has selected for debate tonight a subject about which there is a good deal of continuing discussion among those concerned with the use of live animals in experiments. It is right that the House should join in the discussion.
Let me make it clear that the Government fully understand the strength of feeling on the matter. I want to leave no doubt in anyone's mind that we welcome the constructive discussion on the way forward in what is inevitably an emotive area.
I am fully aware that there are those who take the view that no animal experiments are justifiable and that it is morally wrong to use animals in that way. I do not think that the hon. Gentleman would hold that view, but we respect the sincerity of those who do. However, all the recent discussions, both in Parliament and outside, have made clear the overwhelming view that experiments on animals should be permitted to continue but that they should be regulated and controlled to preserve a proper balance between the welfare of animals and the legitimate needs of scientific advance. That should be the guiding principle.
The hon. Gentleman has expressed particular concern about the LD50 test and the possibility of using other methods that do not require the use of animals. I understand his concern. As a general principle, the Government support the view that alternatives to living animals should be used wherever practicable. There is no difference between us on that score. At the same time, as I shall explain, we should be quite clear about the extent to which it is practicable to use alternatives to animals, either now or in the foreseeable future. It is regrettable, but unavoidable, that many sorts of biomedical research will require the use of animals for some time to come. It is necessary to dispel any misconception that there may be on this point.
The LD50 test has been the subject of a good deal of controversy in the past few years. That led the Home Secretary at the time to ask his advisory committee on the administration of the Cruelty to Animals Act 1876 to inquire into the test; the extent of its use in accordance with statutory requirements and otherwise; the scientific necessity and justification for the test in its various applications; and to make recommendations in the context of his powers under the Act. The advisory committee made a thorough study of those issues and its views were set down clearly in its report to my right hon. Friend the Home Secretary in 1979.
As the hon. Gentleman broadly indicated, the LD50, the lethal dose 50 per cent., is a numerical index that gives some information about the acute toxicity of a chemical substance in experimental animals. The LD50 test is only one of a number of types of acute toxicity experiments, all of which are recorded together in the Home Office statistics published annually without distinction, so a figure for it can only be roughly estimated. The estimated number of animals used for LD50 tests in 1977, for the purposes of the advisory committee's study, was 229,500 out of a total of about 560,000 acute toxicity animal experiments, which represents about 10 per cent. of the total number of experiments. Of the 229,500 some 60 per cent. were mice; some 27 per cent. rats, some 11 per cent. fish and about 2 per cent. birds. In 1980 the total of acute toxicity animal tests was about 485,000, which represents a significant fall. No estimate has been made of the number of LD50 tests, but if the same comparison is applied about 199,000 animals were used. The LD50 test was originally devised in 1927 to overcome difficulties arising in measuring the potency of highly toxic yet potentially beneficial medicines of natural origin, such as diphtheria anti-toxin, digitalis and insulin. Though there are still occasions when it may be used for its original purpose—the standardisation of therapeutic substances known to be toxic—it has in recent years come to be used increasingly in many countries for a different purpose, that is as a step in the estimation of the relative safety of new substances such as medicines, industrial chemicals, pesticides, weed-killers, detergents and food additives.
A preliminary step in the LD50 test is to determine the approximate dose of a substance which is the minimum lethal dose. This usually involves its administration in geometrically ascending doses. At this stage at least three dose levels are required with a minimum of two animals in each group. From the results an estimate is calculated from a graphical plot of the relationship between the number of deaths and the dose of the substance given. The LD50 figure is the quantity estimated to kill half the number of animals. For the LD50 test, five dose levels are commonly employed with 10 animals in each group. Some 14 days after dosing any surviving animals are painlessly killed.
In carrying out its expert review of the test, the advisory committee paid particular attention to the question of pain and alternatives to the test. It did not find it possible to make any judgment on the extent of the pain suffered which would be applicable to all animals subjected to LD50s, because the substances administered varied enormously in their toxicity and the sizes of the doses vary with different groups. In this connection, the requirements of the pain condition attached to all licences granted under the 1876 Act shorten the period over which severe pain is felt. Nevertheless, the committee was concerned that LD50s must cause appreciable pain to a proportion of the animals subjected to them.
The possibilities of determining LD50 values without experiment through the development of computer-based information retrieval systems was considered by the advisory committee. In particular, it considered a claim that the LD50 of any compound administered to a rat orally could be determined by computer from the compound's molecular formula. It reached the view that the limitations of computer-based figures in this field were such that it


doubted whether the technique involved would result in an appreciable reduction in animal usage in the foreseeable future.
After spending two years receiving and examining evidence from animal welfare bodies, industrial associations, advisory and regulatory bodies and medical and veterinary experts, the advisory committee concluded that for the proper testing of new substances some acute and chronic toxicity tests must be carried out on whole live animals; and that where it is necessary to estimate the lethal properties of a substance there was no evidence that there was any better test or one more economical in the use of animals.
Accordingly, the committee recommended that LD50 tests should be allowed to continue but that those who prescribe them or carry them out should always bear in mind that for safety evaluation purposes an LD50 test giving a reasonable indication of the order of toxicity is all that is required; and that wherever practicable a "limit test" —that is, the largest dose-equivalent that a human being might take—should be used in preference to an LD50. If this does no harm to the animal, there is no need to use more extreme tests.
The committee also recommended closer liaison between the Home Office and the bodies concerned with the framing of relevant regulations, both here and in the European Community, relating to the transport storage, marketing and use of toxic substances; the possibility of a uniform code of laboratory practice; that LD50 tests should not be begun at a time which will not ensure adequate supervision of the animals during the expected period of maximum effect; and special controls over the use of primates in any kind of experiment.
My right hon. Friend accepted all these recommendations in principle, and, within the limits of the resources available, they have been carried forward. Through the authorities responsible for registered places where experiments are carried out, licensees under the 1876 Act were urged to take careful account of these conclusions and to act accordingly.
I am aware that there continues to be concern about the use and value of the test. I am equally aware of the constructive consideration which is being given to the question of alternatives, which was discussed by the hon. Gentleman. However, the present state of knowledge does not enable us to avoid the dilemma which arises from the fact that, on the one hand, many new drugs and other substances confer great benefit but carry some risk of toxicity against which the public have a right to be protected; while, on the other hand, there is concern for the welfare of animals. In this situation, we have to strike a balance.
In talking about the defects the hon. Gentleman perhaps overstated his picture. We accept that there may be defects, but the problem is that there is nothing better. It is easy to quote variability, for example, but that would lead to more extensive and larger tests. A species' difference is important, but who can use man as a test species? The variation is minimised by the use of several different species.
Also with regard to alternatives, perhaps cell cultures have a future, but the validation of such tests has far to go. We cannot call the LD50 test obsolete until it is satisfactorily replaced, which has not yet happened.
As I have already explained, we support the use of alternatives where they are practicable. It is my understanding that, where proven alternatives exist, researchers adopt them, not only on humanitarian grounds but because such methods are generally quicker, cheaper and more reliable. Indeed, the use of alternatives is believed to be one of the factors that has led to the levelling off of the number of experiments performed on animals over the last 10 years or so, and indeed to the fall in numbers over the last three years. The Government regularly bring to the attention of all those carrying out experiments under the Cruelty to Animals Act 1876 the importance of taking every reasonable step to confirm before using live animals that their investigations cannot be effectively carried out by any alternative means. Licensees are also urged to give thought to the possibilities of developing new alternatives.
However, calls for the Government to promote research into the development of alternatives tend to ignore a number of important factors. There is likely to be disagreement among scientists about new alternatives in any particular area, and about the relative costs of them in terms of manpower, materials and time.
I understand that the Medical Research Council takes the view that it is not practicable for scientists to be engaged specifically in devising alternatives as their sole or main activity separately from research experiments; and that the person conducting an experiment is in the best position to decide, from discussions with his colleagues, from his own experience and from the literature, whether techniques of his own or others will serve his purpose without using animals. It is also through knowledge of his own techniques and those of others that he is best able to judge during the course of his experiments when an alternative could usefully be developed.
Those well-established approaches to the conduct of research are far more likely, in the council's view, to be fruitful and economical in the use of animals than for scientists to be engaged in the search for alternatives to the use of animals in other scientists' experiments.
This is not a complacent attitude. It is one of realism. We understand the concern that the hon. Gentleman expressed. There is no difference between us in wishing to see a continuing reduction in the use and number of animals subjected to experiments which may involve pain; but this must be consistent with our overall obligation towards human and animal health.
The use of the LD50 test and the question of alternatives will, without doubt, continue to be the subject of debate both in Parliament and in the country. We hope that the debate will be both realistic and constructive, and that it will take proper account of the factors which must be weighed. I am grateful to the hon. Gentleman for raising this issue and hope that I have been able to show to the House that, while we appreciate and understand his concern, there are very real difficulties in advancing at the pace he advocates to the goal which both he, and I, would wish to see.

Question put and agreed to.

Adjourned accordingly at Fourteen minutes past Twelve o'clock.